Confidence Survey Signals Cautious Optimism

24 September 2007

Media Release

Confidence Survey Signals Cautious Optimism

The decline in business confidence that hit a 12 month low in June appears to have bottomed out in a survey of over 750 business respondents undertaken electronically by the Auckland Chamber of Commerce last week.

Key messages from the survey that asked businesses to look ahead at conditions for the next six months showed a slight improvement in overall confidence despite a continued fall in demand, and deep concerns over margins, interest and exchange rates, and input costs.

Commenting Chamber Chief Executive Michael Barnett suggested the findings reflected anticipations of a stronger period ahead in the lead-up to Christmas coupled with relief at the Reserve Bank’s latest announcement holding interest rates for the time period ahead.

But confidence was still low, with less than 20% of businesses expecting the economy overall to improve and less than 50% expecting their own prospects to improve over the next six months.

On confidence

- 38% of firms believed conditions for business will get worse over the next six months, against 40% of this view in the previous survey in June, but compared to just 21% of this view last March. 19% believe conditions will improve, compared to 18% of this view in June but still well below the 27% of this view in the March survey.

- 17% of businesses believe their own situation will get worse over the next six months, a marginal improvement on the 19% of this view in June, and compared to just 11% of this view in March. Matching this slight change, 43% of firms now believe their own prospects will improve, compared to 42% saying this just 3 months ago against the 55% of this view six 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, the same as three months ago, and compared to 37% of this view a year ago.

On interest rates

- 52% of respondents now believe interest rates will rise over the next 12 months, compared to the survey high 86% of this view three months ago, and which is reinforced by a slight increase in the number of respondents signalling intentions to invest in expanding the business, from 30% in this survey compared to 28% in June.

ENDS

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