Business confidence nosedives

25 June 2007

Media Release

Business confidence nosedives

Confidence hit a 12 month low in a survey of over 1000 business respondents undertaken electronically by the Auckland Chamber of Commerce early last week.

Key messages from the survey that asked businesses to look ahead at conditions for the next six months painted a grim picture of confidence in freefall fuelled by falling demand, skill shortages and deep concerns about high interest rates and the exchange rate.

Commenting Chamber Chief Executive Michael Barnett suggested the findings reflected an economy that was becoming increasingly conditional and therefore promoting uncertainty.

“At the moment there is uncertainty around issues of interest rates and exchange rates, there is a growing number of businesses who cannot find either skilled or unskilled workers and there remains a large number of businesses who believe the Government should have done more with taxation than they did in the last budget.

NZ needs to respond aggressively to these conditions that have emerged over the past 3-6 months with a bold, innovative strategy that will re-position our economy internationally, and not just accept that businesses should batten down the hatches because conditions have got too tough.

By that I mean an action based response that lowers the attractiveness of our high interest rates to global currency traders, addresses skill shortages and encourages exporters to be positive about their long-term prospects.”

On confidence

- 40% of firms believed conditions for business will get worse over the next six months, up from 21% of this view last March and matching the situation a year ago. Only 18% believe conditions will improve, compared to 27% of this view in the March survey.

- 19% of businesses believe their own situation will get worse over the next six months, up from the 11% of this view in March and matching the 18% of this view a year ago. In contrast, 42% of firms believe their own prospects will improve, compared to 55% saying this just 3 months ago. The most persistent issue affecting individual businesses is the difficulty finding suitable staff.
On skills

- 42% of firms believe it will be harder to employ people with the right skills, compared to 37% of this view a year ago. Those finding it difficult to recruit unskilled workers also increased, from 15% a year ago to 17%. Those sectors most affected are manufacturing, technology and trades.

On interest rates

- 86% of respondents believed interest rates will rise, which for many translates in to reduced intentions to invest in expanding the business and added pressure on a shrinking bottom line.

ENDS

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