Christchurch Business Still Taking Positive Outlook

Christchurch Business Still Taking Positive Outlook

Almost half of Christchurch businesses expect revenue increase next year Short-term work down, with 40% reporting less in the pipeline Over a quarter expecting to employ more staff

Despite the latest aftershocks to strike the city, Christchurch businesses remain positive in their outlook for the future, with almost half (46%) of local businesses expecting their revenue to improve over the next 12 months, and only 17% expecting revenue to fall, according to a special MYOB survey completed in Christchurch last week.

The survey of over 260 businesses based across the city highlighted the cost of the last 10 months of earthquakes in the region, with 45% of businesses reporting a fall in revenue compared to the same time last year. Across the country, 32% of businesses reported falling revenues in the last 12 months according to the April 2011 MYOB Business Monitor.

Christchurch businesses are also expecting to see ongoing effects of the earthquakes on their operations over the next quarter, with 40% expecting less or a lot less work in the pipeline over coming months. However, some sectors of Christchurch continue to do well, with over a quarter (27%) reporting more work in the pipeline.

MYOB general manager Julian Smith says despite more than 10 months of business disruption caused by the earthquakes, Christchurch businesses are proving to be extraordinarily resilient.

“Christchurch and the Canterbury region has always been the quiet success story in our regular MYOB Business Monitor research, consistently outperforming the rest of the country,” says Julian Smith. “And despite the massive costs and disruption caused by the quakes, Christchurch businesses are still focused on growth and development.”

According to the MYOB Business Monitor special Christchurch report, two thirds (67%) of businesses in the city are planning for revenue and customer growth over the next 12 months – this optimism contrasts with the national average where 48% of businesses seek growth in 2011.

Employment indications in the city are also positive, with 63% of businesses expecting to maintain the same level of staffing and 26% expecting to employ more staff in the next 12 months.

“This research paints a picture of a city that has a strong business structure, which despite facing not only natural disasters but also the ongoing effects of the recession and a slow recovery, will see steady economic improvement over the next 12 months,” says Julian Smith.

According to the special MYOB report, the key quake-related pressures businesses are facing in Christchurch at the moment are insurance costs (60%), the location of business premises (47%), and disaster recovery activities (46%). The flow-on effects of the earthquake are also putting pressure on the local economy, with Christchurch businesses highlighting cashflow (66%), customer payments (58%) and consumer spending (55%) as their top concerns.

Costs for businesses have also increased in the region, with insurance spending up 40%, and office and facility costs increasing by 15%. Investment in R&D (down 6%) and the number of sales and promotions held in the city (down 23%) have decreased, but Christchurch businesses have continued investing in marketing and advertising (up 3%) and activity in new markets (up 9%).

“Despite a third of businesses expecting to face some challenges in working with CERA and the EQC, the Christchurch business community is strongly endorsing the performance of the Government during the earthquakes,” says Julian Smith.

According to the survey, 60% of Christchurch businesses are more likely – and 18% a lot more likely – to vote for the Government based on their handling of the earthquake and performance over the last 6 months.

Businesses supporting the Council’s handling of the earthquake also slightly outweigh those who are dissatisfied with it, with 57% of businesses saying the support of the CCC has been better over the last six months.

“Interestingly too, the MYOB Business Monitor special Christchurch report has highlighted just how self-reliant businesses are in Christchurch,” says Julian Smith.

“Rather than asking for more Government support, in terms of things like an extension of the employer subsidy and tax holidays, or repayment breaks from their banks, the key thing Christchurch businesses want is their insurance payments settled quickly.”

The top five priorities of Christchurch businesses are: Fast track insurance payments (23%) Rapid repair of infrastructure (10%) Rapid CBD development (9%) Fast track council consents (5%) Consumer stimulus payment (5%)

“Clearly, in order to realise Christchurch business’ ambitions for the future, the Government, the Council and – most importantly – insurers, need to be working together to put the right support in place for the region.”

About the MYOB Business Monitor The MYOB Business Monitor is a nationwide survey of over 1,000 New Zealand business owners, across a range of small and medium businesses, from sole traders to mid-sized companies, and representing the major industry sectors. The MYOB Business Monitor is designed to research key areas of business performance, including profitability, cash flow and pipeline work, as well as business confidence. The MYOB Business Monitor special Christchurch report is a survey of 264 business owners and representatives, conducted from 6 - 14 June 2011.

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