Business Confidence Stalled, Michael Barnett Auckland Chamber of Commerce

Auckland businesses are signaling a big slide in confidence in the overall business environment, with confidence in their own prospects stalled on what it was three months ago.

These are key messages from a survey of 1000 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, 32% of respondents believe the situation will improve over the next six months compared to 39% of this view in the previous survey in August. Meanwhile 18% believe the general situation will worsen, compared to 13% of this view in August.

However, when taking account of those who believe the situation will improve, stay the same or deteriorate a net 12% drop of confidence in the general business environment is flagged compared to just three months ago.

Among other findings 20% of businesses are expecting it to be harder to find skills in the next three months, the same proportion as in the August survey. However, on the positive side 46% of respondents are expecting interest rates to rise over the next 12 months compared to 54% of this view last August.

Commenting, Chamber chief executive Michael Barnett says the findings reflect an economy that is stalled in the slow lane through a combination of circumstances.

“As well as coming off the back of the Rugby World Cup and in the middle of a General Election campaign, the survey result reflects the confused global environment especially in Europe.

“Putting these events together there appears to be an overall lack of confidence and many businesses not making decisions to change their future prospects.”

The stalled decision-making is reinforced in responses to a question on what single factor is most limiting growth. Usually, demand is always a major issue.

However, in this survey demand was less of an issue for those in manufacturing, wholesale distribution and services, but was more of an issues for trades.

“It is also interesting to note that demand for smaller businesses employing 20 or less was less of an issue in this quarter than for larger businesses. This suggested resilience to adjust within the SME sector.”

However when it came to finance, the strength and resilience of larger businesses showed through. For this group finance was less of a constraint than what it is for SMEs.

Reinforcing the lack of forward momentum, the survey indicated that investment intentions in building improvement remained stagnant while there was a small lift in intentions to invest in machinery.

Also, permanent employment intentions for the next three months were down, and total hours worked were also projected to be down in the period ahead.

Costs and selling prices remained the same as in the previous survey in August as did expectations around profitability. Export sales were up marginally.

“Clearly, moving beyond this week’s general election and into the pre-Christmas period, there needs to be some reinforcement to businesses of the benefits of maintaining a sense of purpose, staying true to their vision and looking at every opportunity to innovate and achieve their growth plans.”