Business confidence stays flat with 'more of the same' predicted.....

The slow decline in business confidence that began a year ago has continued in a survey of about a thousand business respondents undertaken electronically by the Auckland Chamber of Commerce late last week.

A lowly net 19% of respondents believe the economy will improve over the next six months.

“The survey result makes for grim reading,” commented Chamber Chief Executive Michael Barnett.

“It provides clear evidence that the economy is in limbo and lacking energy and direction, with many respondents offering excuses as to why they believe their own business situation will remain flat or deteriorate further in the next months.”

Excuses given as to why businesses are not doing well included:

· The slowdown in the building industry

· Costs have already been cut to the bone

· There is so much competition it is hard to survive

· Slow payments by clients and customers

· Pressure from the banks

A number of respondents indicated that while the agriculture sector seems to be doing OK, most farmers were retiring debt meaning no pick up in service sectors.

Main survey findings were:

On Confidence

· 16% of firms believe conditions for business will get worse over the next six months, compared with 14% in the previous December and September surveys. However, 35% believe conditions will improve, compared with 32% in the December and September surveys and 42% in the June survey.

· 49% of firms believe conditions for their own individual business will improve over the next six months, the same as last December and down from the 52% and 55% of this view in the surveys last June and March respectively. In contrast, 11% believe their situation will get worse, compared to 10% and 9% in the previous two surveys.

On Skills

· 18% of firms believe it will continue to be harder to employ the right people with the right skills, compared to 23% and 20% in the previous two surveys.

On Interest Rates

· 43% of respondents now believe interest rates will rise, compared with 54% in the previous survey in December and 62% in September. However, just 3% of respondents believe interest rates will decrease in the next 12 months, the same as the previous four surveys.

“This is a ‘here and now’ survey of what business believes. We cannot hide from the facts – ‘many businesses are doing it tough out there’ and the result for Auckland is reinforced by similar findings in a survey of provincial centres in the upper North Island,” said Mr Barnett. “It didn’t make for good reading.”