Business confidence strongest up north

Business confidence is creeping upwards from south to north, according to the recent inaugural New Zealand Chambers of Commerce Business Confidence Survey.

While a total net positive of 42 percent of respondents expect the New Zealand economy to improve over the next 12 months, regional variation shows that confidence improves the further north businesses are.

A net 44.2 percent of businesses in the upper North Island (including Auckland) expect the New Zealand economy to improve over the next 12 months, compared with a net 44 percent in the central and lower North Island (including Wellington), a net 30.9 percent in the upper South Island (including Canterbury) and a net 34.3 percent in the lower South Island (including Otago). 

Of the total responses, 53.1 percent expect the economy to be better. Just 11 percent expect the economy to decline and 35.6 percent expect it to remain the same. 

 The survey was conducted over a two-week period in late November, and 1539 responses were received from the chamber network around New Zealand. 

Greater confidence was expressed in local and regional economies, with a national net positive 47.6 percent believing there would be improvement.

Businesses were equally confident their local economy and their businesses in particular would do well, reflecting confidence in their own ability to succeed in a “generally positive economic environment”. 

When respondents were asked about their own business situation, a net 65.2 percent said they expect to see an improvement over the next 12 months. Businesses also expect to see a boost in earnings, with a net 61.9 percent forecasting an improvement. Of all respondents, 70.7 percent expect an improvement while 8.8 percent expect earnings to decline. 

Staff hiring expectations were encouraging, reinforcing that businesses expect their own activity to remain steady. When asked what changes they expect to total staffing numbers over the next three months, a net 30.8 percent of businesses said they expect to be looking for more staff (39 percent expect to hire while just 8.2 percent expect staff numbers to decrease). 

However, finding skilled staff continues to be a challenge for businesses, with just 6.6 percent saying it was easier to find skilled staff than it was 12 months ago, and 41.6 percent saying it was harder.

Auckland Chamber of Commerce Chief Executive Michael Barnett said the results were good for business heading into the summer months where business and consumer confidence was positive.

“The result for Auckland reflects an economy that is investing heavily in its infrastructure, generating significant investment from the public and private purse which is good locally and nationally. New Zealand can expect this from Auckland for the next five years.

“Of concern to Government must be the fact that over 40% of businesses wanting to hire are having difficulty finding the right people with the right skills,” he said.

Wellington Chamber of Commerce Chief Executive John Milford said the results show the pragmatism of business given the economic environment. 

"What we're seeing is that the majority of businesses believe conditions will remain about the same, with a fairly positive spread. Wellington business activity remains steady and own business confidence high, in part due to inflation and interest rates remaining very low. It's encouraging to see stable business intentions around hiring of staff, and that suggests many expect to be holding their own into the near future.”

Canterbury Employers’ Chamber of Commerce Chief Executive Officer Peter Townsend says the results show the increasing complexities associated with the rebuild, with activity plateauing at a very high level.

“We are continuing to see strong reconstruction activity underpinned by a generally robust economy.

“Business confidence is about relativity and while there is some caution about conditions continuing to improve there is clearly confidence that activity will continue across the economy at high levels.

“There are early signs that the dairy downturn and  extremely dry conditions  may be influencing  wider business confidence.”

Otago Chamber of Commerce Chief Executive Dougal McGowan says that while the southern results are tempered with mixed confidence, businesses were reporting a good run-up to the Christmas holiday period, with a 'positive vibe' around Otago.

“Over the past quarter we’ve seen retail sales, house sales, cement production and commercial consent activity rebounding, with activity increasing. This is yet to translate into full confidence, given the recent downturn in global dairy prices, but remains in positive territory.”