Business confidence remains low but there are encouraging signs that the worst of the residential real-estate slump is over, the latest BNZ confidence survey shows.
BNZ chief economist Tony Alexander yesterday said the first survey of the year had revealed a deteriorating in sentiment from the previous survey in December.
A net 23% of respondents expected the economy to get worse through the coming year, up from 6% three months ago.
Businesses generally were facing cash-flow constraints and were trimming expenses in expectation of tough conditions continuing.
Retailing remained weak, tourism operators were fearful, residential construction was poor, but some farmers were feeling happier, he said.
However, one "very clear change" in this month's survey results compared with surveys late last year was in residential real estate.
"Lower interest rates, along with increasing perceptions of a shortage, have contributed to a significant improvement in sentiment.
"At the same time as vendors have become more realistic in the prices they will accept, more buyers have been entering the market. They appear to be a mixture of both owner-occupiers getting on with life and investors attracted by yield compared with the alternatives."
That did not encourage Mr Alexander to write in terms of rising prices - not with the unemployment rate set to soar.
It appeared the market was "clearing" more easily and it was becoming appropriate to speak in terms of turnover having passed its weakest point.
"What will be interesting is the impact later this year and through 2010 of an expected surge in net immigration and worsening housing shortage due to the construction collapse," Mr Alexander said.
One of the interesting statistics shown in the survey results was the number of respondents, which surged to 867 on March 6 from 479 on December 4.
Last year, the lowest number of respondents was the 233 in February. Of those, 170 made comments.
In March last year, the survey had 236 respondents, 160 of whom made comments.
This March, 740 of the 867 respondents made comments.
Among the comments received were several from accountants who reported they were mainly busy with calls from anxious clients, although getting paid by those clients was proving difficult.
In agriculture, an Otago sheep and beef farmer was very positive regarding the short-term outlook for sheep meat. Rumours of some big money for out-of-season lambs and forward contracts out for next season were already at better money than last year. Unfortunately, it was being driven by lack of supply and the currency, and not by increased demand.
The agriculture-servicing industry was starting to struggle as farmers put away their chequebooks and took on more duties themselves rather than hiring contractors.
A business consultant reported being busy with regular clients and a rehabilitation programme for a large winery and vineyard in Central Otago.
Angel investors were less willing to take chances with their cash on start-up companies, which were now likely to go under through lack of cash.
A contractor to the building industry operating in Auckland, Northland, Bay of Plenty and Central Otago said he had priced a substantial amount of work this year, the majority in leaking-building work or refurbishment. Very few of the clients were able to pay on time, creating cash-flow problems for the contractor.
Engineering-industry suppliers noticed a slowdown in some sectors and people losing their jobs. Firms said they had enough work to get them through to July or August but they had nothing long-term on their books.
Financial services reported slow business, personal finance advisers seeing steady growth in "doubtful debts".
Some of the most disturbing comments came in the human resources sector, where recruitment agencies reported the situation as "pretty grim".
Recruitment freezes were in place around the country and although a skill shortage remained, employers were selective. An advertisement for one reception job received 249 responses.
Job sharing was becoming more common as people battled to keep their jobs, and HR consultancy firms were busy with businesses of all sizes, which were restructuring. A lack of awareness about how to make people redundant meant employers were facing mediation or litigation and significant costs.
Australian companies were exposed to costs as the rules relating to the redundancy process were different in New Zealand.
Supermarkets said they were seeing growth in sales as people still had to eat in a recession, but customers were becoming very price conscious and had stopped buying treats or feelgood products.
