Business confidence dips into negative territory

Sunday, 14 April 2019

Business confidence has become a subject of much debate in 2018.

Business-owners confidence in New Zealand's economic prospects have dipped into negative territory again.

The Wellington Regional Chambers of Commerce and Business Central survey of business confidence said more businesses expect the economy to worsen than expect it to improve in the next 12 months.

A net negative 8 per cent of businesses across central New Zealand now expected the economy to worsen.

Wellington businesses have had a dip in confidence in the national economy.

That compared to a net 7 per cent expecting an upturn in the economy recorded in the December survey.

* Should we care that business confidence is so low?**

Businesses' confidence continues to fluctuate. The positive result from the December survey followed a net negative 12 per cent result from the survey in September.

Wellington Regional Chambers of Commerce and Business Central chief executive John Milford said the survey result reflected the uncertain business environment with confidence rebounding and then falling away again in consecutive quarters.

'The new year started out positively, but with the recent release from the Tax Working Group and changes to employment law coming into effect, businesses are being hit hard,' Milford said.

“Our members across central New Zealand are still struggling to fill staffing shortages and currentGovernment policy on the issue hasn’t helped,' said John Milford, chief executive of Wellington Chamber of Commerce.

'Then there are still issues to do with employing the right staff and skills, which businesses are struggling with.'

The biggest barriers to growth businesses and organisations were facing, were finding skilled workers (23 per cent) and compliance costs and financing issues (14 per cent).

But while business-owners foresee a hard time for the country's economy, the majority remained confident about their own prospects.

A net 38 per cent expected an uplift in their own prospects in the coming 12 months, though that was down from a net 47 per cent in December.

Government policy may be behind the dip in business-owners' sense of confidence in the national economy.

Business confidence tends to be volatile and tends to be much stronger when National is in Government than Labour, irrespective of how the economy is actually performing. How respondents expect their own business to perform, whether they are planning on hiring new staff or invest in new equipment or property, are seen as a much better guide to how the economy will perform.

'Our members across central New Zealand are still struggling to fill staffing shortages and current Government policy on the issue hasn't helped,' said Milford.

'Finding skilled labour is a far greater concern than the other stand-out issues of central government policy, compliance costs, and financing issues.'

'Concerns across the regional economy are strongly focused on having adequate transport infrastructure, with almost one-third of respondents identifying this issue as holding back regional growth. This is unchanged from our December survey.'