Businesses’ views on New Zealand’s economic outlook have dropped further into negative territory, according to a survey by Wellington Regional Chambers of Commerce and Business Central.
In the latest survey, a net negative 20 per cent of business respondents across central New Zealand expect the national economy to be worse in the next 12 months. This compares to the March survey, in which a net negative 8 per cent of businesses said they expected the economy to be better in 12 months, and a net positive 7 per cent in September.
Wellington Chamber of Commerce chief executive John Milford said the result was in line with two recent bank surveys showing confidence was the lowest it had been in 10 years, and reflected the very uncertain trading environment that businesses were talking to him about almost on a daily basis.
The quarterly survey was sent to Wellington Regional Chambers of Commerce and Business Central members across central New Zealand (from Taranaki and Gisborne down to Nelson) over two weeks in June and received 372 responses.
“After a relatively positive start to the year, the trend is all downhill. Businesses are struggling with the combination of the changes to employment law, continuing increases in compliance costs, and difficulty finding the right staff with the right skills.
“Because of that, intentions to invest in their own business continue to drop, and that has a negative ripple effect through the economy.”
When asked unprompted about the barriers their business and organisations were facing, 25 per cent quarter of respondents cited issues with finding the right staff and skills (23 per cent in March), 19 per cent said compliance costs (14 per cent in March), and 12 per cent said central government policy direction and leadership.
That was reflected in answers to questions about expectations in their own situation. A net positive 26 per cent of respondents expect business to improve, however this was down on the previous quarter’s net positive 38 per cent. When asked if they were expecting to invest further in their own business or buy new equipment, just a net positive 17 per cent said they would invest more (18 per cent in March).
“This is the third quarter in a row where businesses’ confidence in their own situation has declined. This is a real concern, because companies know themselves exactly how they’re running, their costs, and what they can afford, and if that’s what they’re thinking then that’s a worry,” says John Milford.
When asked to list the three main issues that concerned them the most about doing business in their area, 55 per cent said finding the right staff, 52 per cent said the rising cost of doing business, and 49 per cent said compliance and regulation.
Expectations for the regional economy halved from the March survey, from a net positive 12 per cent to a net positive 6 per cent.
John Milford said he was concerned that many businesses were struggling to deal with the combination of issues and the effect low confidence was having on both the national and local economies.
“Business needs to see a way through the problem of staffing shortages and compliance costs while dealing with the employment law changes, but to be honest I can’t see how that’s going to change anytime soon.”
The survey also asked businesses if Budget 2019 delivered for them. Some 59 per cent said it didn’t while 9 per cent said it did. The remainder were not sure.
The next survey will be in September.