Media release: 6 August 2012

New Zealand Businesses Outperforming Aussie Counterparts

• Australian business revenue falls while NZ finds modest growth

• NZ businesses expect stronger revenue in year ahead

• Optimism slim on both sides of the Tasman

New Zealand may be struggling with patchy growth but the picture across the ditch is less rosy, with the latest MYOB Business Monitor reporting weaker business performance for our biggest trading partner.

According to the MYOB Business Monitor, a regular survey of over 1000 SME business owners in each country, New Zealand businesses outperformed their trans-Tasman neighbours to post modest revenue growth while Australian businesses saw revenues fall dramatically. A net 23% of Australian SMEs saw revenues fall in the last 12 months, compared to a net 1% of New Zealand businesses that saw an increase in earnings.

MYOB general manager Julian Smith says the survey underscores how challenging trading conditions have become in Australia, with businesses outside the mining industry experiencing a significant slowdown.

“While it’s encouraging to see New Zealand businesses are clearly performing competitively in the local market, you’d need to look very carefully at these numbers if you’re a business that exports to Australia or if you are looking to move across the ditch in search of a new job” says Julian Smith.

“Those industries where Kiwis have traditionally found employment – especially in the construction and trades sector – have been particularly hard hit, which may serve to temper the flow of New Zealanders heading across the Tasman, at least for the short term.”

Businesses in Australia’s construction and trade industries suffered the worst performance in the latest survey – with a net 35% experiencing a revenue loss in the past 12 months. They were closely following by the transport and warehousing sector (net 33% decline), the finance and insurance sector (net 33% decline) and the manufacturing sector (net 23% decline).

In contrast, the same sectors in New Zealand reported better results. A net 4% of New Zealand businesses in the finance and insurance sector and the same number in the manufacturing sector reported revenue gains. Local businesses in construction and trade had the most challenging year, with net 14% reporting revenue losses, followed by the transport and warehousing (net 7% decline).
Looking ahead, New Zealand businesses are also forecasting better performance this year than their Australian counterparts, with a net 22% expecting revenue to increase in the next 12 months, compared to only net 7% of Australian businesses.

These figures reflect a shallow sales pipeline over the next 3 month for a significant number of businesses in Australia, with only a net 2% of businesses across the Tasman reporting more work in the coming quarter, compared to a net 8% of New Zealand businesses.

Mr Smith says along with global economic headwinds, and particularly a slowdown in China’s growth, Australian businesses are being pressured by fuel costs and stalling in consumer demand.

“Issues like the introduction of the new carbon tax are also creating new pressures for Australian SMEs, with many reluctant to increase prices in order to offset the additional costs.”

“This is reflected in a growing pessimism across the Tasman – where less than a fifth of businesses believe the economy will improve in the next 12 months – in line with the expectations of businesses here.”

“And while it’s nice to see New Zealand on the positive side of the trans-Tasman comparison, it won’t be any relief to our exporters, as Australia is our largest trading partner.”

According to the MYOB Business Monitor a net 7% of New Zealand exporters experienced a fall in revenue in the last year, with a net 5% expecting losses to continue over the next 12 months.

“With our economies so tightly linked, we’ll be looking for some improvements in the Australian economy over the coming months to provide relief for our export sector, while hoping that New Zealand’s modest growth can continue to provide enough opportunities to see more Kiwis stay to work here.”

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