Business Confidence Positive, But With Headwinds Looming

Business Canterbury (formerly the Canterbury Employers’ Chamber of Commerce) released the results of its March Quarterly Canterbury Business Survey to members today, highlighting generally positive business confidence, but also some potential headwinds coming as the effects of rising costs and dwindling consumer demand bed in.

Chief Executive, Leeann Watson says "While business confidence has levelled out following a post-election surge in our November survey, most measures remain positive."

"51 per cent of businesses are positive about their financial performance over the next 12 months, a drop from 59 per cent last quarter but higher than the long-term average of 45 per cent.

"47 per cent expect the Canterbury economy to be stronger in the next 12 months, much higher than the long-term average of 30 per cent"

The top five issues for businesses identified in the March survey are inflationary pressure and rising interest rates, consumer confidence and demand, productivity and growth, increased compliance costs, and labour market constraints.

"What worries me most is that 71 per cent of businesses still expect costs to rise over the next 12 months, with more than a third experiencing significant impacts from rising input costs, wages, and interest rates.

"Alongside rising costs, increasing concerns about consumer confidence and demand are prompting businesses to focus more on cost and profitability management, resulting in another quarter of subdued investment and hiring intentions.

"While still a positive number, 63 per cent of businesses are looking to invest in their businesses over the next 12 months which is much lower than levels in the mid-70s just 12 months ago.

"Hiring intentions have also fallen just under 10 per cent. While also likely related to cost management, it corresponds with a decrease in the level of concern about labour market constraints which is slowly dropping down our list of the biggest business barriers.

"In more positive news, businesses' ability to deal with disruption is on the rise, with 79 per cent confident in their ability to do so this quarter, up from 66 per cent six months ago.

"There has also been a very clear rebound in the perceptions of Government economic management, with a net positive sentiment for the first time since Business Canterbury started running its survey.

With several early engagements with new Ministers already this year, Business Canterbury will continue to use results from the Quarterly Canterbury Business Survey to advocate for a business environment more enabling of innovation, productivity and sustainable growth. For a more detailed survey analysis, please refer to the summary document attached, or the Business Canterbury website.

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