Business signalling a long flat slowdown

Auckland businesses are signalling a long flat slow down rather than a deep recession according to a survey of over 1450 business respondents undertaken electronically by the Auckland Chamber of Commerce last week.

Asked to look ahead at the general business environment for the next six months, 47% of respondents believe the situation will stay the same or improve, compared to 44% of this view in the previous survey last December.

53% of respondents are picking the general situation to deteriorate, against 56% of this view last December.

In respect of how respondents see their own business situation over the next six months, 74% predict they will improve or stay the same compared with 67% of this view last December.

Just 26% expect their own situation to get worse in the next six months, compared to the 34% of this view last December.

On interest rate trends, 69% of businesses are picking interests rates to fall further in the next 12 months, compared to just 5% expecting an increase.

Commenting, Chamber Chief Executive Michael Barnett notes that Auckland business confidence hasn’t dropped further to what it was in the pre-Christmas period. Coupled with the comments many made about maintaining a wary attention to confirming sales, raising finance and getting paid, the survey findings suggest Auckland businesses have prepared themselves for a medium period of flat to no growth.

At the same time, the mood among many Auckland businesses continues to be positive and reflect a strong self-belief that getting on with ‘doing the business’ continues to be rewarded with results.

“This is a good sign. On the one hand it is apparent that the strong impact the recession has had in other economies such as the United States and United Kingdom resulted in many businesses here putting up the shutters early.

“On the other hand, it is also apparent that many businesses now see that ‘sitting on hands’ is not an option.”

As a window on Auckland business opinion, the around 1500 businesses that responded to the survey reinforces the case for positive action to ensure when we come out of the recession – predicted by the IMF to be mid next year - businesses are in good shape to take advantage, stressed Mr Barnett.

“The initiatives the Government is taking to encourage businesses to hold on to skills, and stimulate local manufacturing will be important to ensuring that they don’t run against a skill shortage when things improve.

“There is also action businesses could be taking to augment tight domestic markets by building exporting capacity. The scope businesses see for further cuts in interest rates is also realistic.”

If business and Government can continue to work closely on a combined action plan to position businesses for a growth environment, then should be in good shape to emerge from this situation early, compared to some other countries,” stressed Mr Barnett.

For more information contact Michael Barnett: Ph (09) 309 6100 or Mob 0275 631 150