Small businesses upbeat about year ahead

New Zealand small businesses finished 2016 on an upbeat note, with confidence at its highest levels in almost two years, according to ANZ’s quarterly Business Micro Scope survey of small firms.

A net 20% of respondents - up from 17% in the September quarter - say they are confident about the business environment in the year ahead. Within this group, micro firms’ (0-5 employees) confidence rose a solid 5 points to +14, while intermediate firms held steady on +26.

The ANZ composite measure – a key proxy for growth – lifted to +20 during the quarter. The composite measure is based on firms’ activity outlook, hiring, investment and profit expectations, all which improved in the quarter.

“It was a storming finish to a good year for New Zealand’s small businesses,” said Andrew Webster, General Manager Retail and Business Banking. “If the confidence plays out, 2017 will be an excellent year for small businesses with a net 34% expecting a lift in activity for their business over the next 12 months.”

The composite growth measure lifted across all five regions – Wellington leads the way followed closely by regional South Island. Auckland continues a gradual climb while growth prospects in regional North Island and Canterbury have started to gain more momentum.

“While overall sentiment and growth prospects are positive, concern about finding skilled staff continues to create a potential wedge between growth prospects and actual growth. Competition and regulation are also seen as obstacles to businesses realising their growth potential in 2017,” Mr Webster said.

Growth prospects for four of the five sectors improved in December with construction and 
services leading the way.

Highlights from the December 2016 ANZ Business Micro Scope survey of small firms:
[Net percentages reflect the balance of sentiment, i.e. percent positive minus percent negative responses]
  • Small firms’ confidence in the business environment lifted to +20%, from +17% in September.
  • The composite measure (a growth indicator taking in firms’ own activity, employment, investment and profit expectations) rose 5 points to a high of +20%.
  • Growth prospects for Wellington (+32%) and the South Island outside Canterbury (+31%) are the highest, followed by Auckland (+21%) and Canterbury (+15%).
  • The Construction sector (up 7 points to +30%) led the way, followed by Services (up 2 to +27%) and Manufacturing (up 5 points to +24%) and Retail (up 7 points to +14%). Agriculture reversed its September slide to pick up 11 points to +1.4%.
  • Lack of skilled staff, Competition and Regulation are at the top of business owners’ concerns.