Wellington Business confidence declines, survey shows

Wellington Chamber of Commerce
Media Statement
Monday January 16th 2017
Wellington Business confidence declines, Chamber survey shows

Business confidence in the Wellington region's economy has declined, according to the latest Wellington Chamber of Commerce Business Confidence Survey.

A net of just 34 per cent of business respondents expect the Wellington economy to improve over the next 12 months, a decline on the net positive 62 per cent in the previous survey in September.

Wellington business confidence in the national economy has also dropped, with a net 48 per cent expecting improvement, versus the net 57 per cent indicated in September. Of all responses, some 57 per cent expect the national economy to improve, 34 per cent expect it to remain the same, and 9 per cent are expecting a decline.

The survey was conducted over a two-week period in mid-December.

Despite the drop in optimism, businesses are still indicating a secure outlook for their own situations, although this has dropped. When asked about their own business situation, a net 50 per cent said they expect to see an improvement over the next 12 months – compared to 61 per cent in September and 57 per cent in June.

Businesses said they expect to see a steady increase in earnings, with a net 53 per cent forecasting an improvement, compared to 55 per cent in September and 54 per cent in June. Some 66 per cent expect an improvement, while 13 per cent expect earnings to decline.

The number of businesses expecting to invest more in plant and equipment over the next 12 months dropped to a net 36 per cent from 39 per cent in September and 33 per cent in June.

Intentions to hire staff remain positive and consistent. A net 29 per cent of businesses said they expect to be looking for more staff over the next three months, compared to 32 per cent in September.

Finding skilled staff was slightly easier, though it continues to be a challenge, with 5 per cent of companies saying it is easier to find skilled staff than it was 12 months ago, up from 3 per cent. Some 43 per cent said it was harder to find skilled staff. When asked, unprompted, what barriers were holding back their business, accessing or attracting skilled staff was the number one issue. This is consistent with the Chamber’s September and June surveys.

When asked, unprompted, what barriers or issues they believed were holding back the Wellington economy, the most commonly cited issue was the November earthquake. This was followed by infrastructure, leadership, and transport issues.

Chamber of Commerce Chief Executive John Milford says he is not surprised by the drop in business confidence, considering the survey was conducted just four weeks after the earthquake-flooding double-hit in the week of November 14.

“These two events, coming so closely together, hit confidence hard, and though most businesses were back on their feet within days, these things do have an impact.

“Our survey on how businesses were affected by the earthquake showed that more than 62 per cent of those surveyed across the region (441 of the 711 businesses that responded) were impacted in some way, ranging from damage to premises, damage to stock, staff disruption, freight disruption, premises closed for days or weeks, a reduction in business activity and sales, and significant loss of income anticipated over coming weeks or months.

“In addition, some 357 respondents said their business was affected by the flooding event, with damage to premises and stock, workplace closure, and staff disruption.

“Having said that, the survey results show Wellington business confidence is actually tracking in line or better than other surveys.

"For example, ANZ's December business outlook report shows a net 22 per cent of businesses nationally are optimistic about the year ahead, compared with 48 per cent of our region’s businesses.

"And though 50 per cent of our businesses expect to see an improvement in their own situation over the next 12 months, nationally that figure is at 40 per cent. Likewise, investment intentions, hiring, and profit expectations among Wellington businesses are similar to or better than national expectations.

“This is all with good reason, and once Wellington region businesses return from the holiday break they will see that all the signs for economy are good: national GDP continues to track above 3 per cent, consumers’ discretionary spending is up, interest rates remain low, there are plenty of jobs, and the unemployment rate is below 5 per cent

“Taking all this into account and considering what business has had to endure in the last quarter of 2016, confidence in both the region’s and the country’s economy has held up very well, and I expect to see positive movement upwards in confidence in our next survey in March.”

ends

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