'Cautious lift' in business confidence, but inflation and labour headwinds remain

Monday, 17 October 2022

The overall inflation rate gives a good measure of the bigger picture, but it’s just an average. Video first published August 30 2022.

Though Wellington business is signalling a “cautious lift” in confidence, ominous clouds remained on the horizon with most expecting inflation and labour shortage to worsen.

More than half of those who took part in the Central New Zealand Business Confidence Survey, being released on Wednesday, were already saying that labour market pressure was the single biggest barrier they now faced.

“We have never felt as fatigued as we do now in terms of our business and the challenges, we can see facing us,” one unnamed respondent said.

“It is never-ending, and the stress has taken so much joy out of what we do.”

The business community expects inflation to be the biggest headwind in the medium term.

Wellington Mayor Tory Whanau said they had to push to make Wellington a livable city.

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More than 200 business leaders in central New Zealand – most in the greater Wellington area but also in Gisborne, Hawke’s Bay, Taranaki, Wairarapa, and the upper South Island – were involved in the survey, run by the Wellington Chamber of Commerce and Business Central.

Wellington City was home to almost half (47%) of the businesses surveyed.

Wellington Chamber of Commerce business confidence survey shows a slight lift in recent months.

New Wellington mayor Tory Whanau said the general sentiments reflected in the survey were in line with the feedback she was hearing.

“People are doing it pretty tough, although there was a real recognition that we have strong global pressures at play here,” she said.

“They certainly recognise we are in for a tough couple of years.”

Whanau said although there were “no easy answers”, the council should concentrate on making Wellington a great place to live.

“We do need to pull all the levers that we can to make the city liveable, while attracting new talent here.”

Porirua Mayor Anita Baker said her district’s manufacturing sector seemed to have plenty of work to be going with.

She said they were working to improve housing supply, public transport and create better foot-traffic friendly streets for inner city businesses.

Wellington Chamber of Commerce and Business Central chief executive Simon Arcus said the one bit of good news from the survey was that, after a record-low in July, there has been a small “cautious lift” in confidence.

“But cost pressures remain high and are a drag on growth. Producer prices are running well ahead of consumer prices, and although businesses are doing everything they can to avoid passing on costs there is a limit to this. What’s more, they are paying higher prices for goods and services themselves.”

Nine in every ten businesses surveyed said wage pressure were heightened and worker shortages meant they were unable to meet demand from customers. Eight in every 10 expected inflation to worsen in the coming year and for prices to continue to incease.

“We’re keeping a close eye on business inventories for an early indication on whether consumers are cutting back,” Arcus said.

“Rising prices and a risk of slowing demand means a deeply uncertain time to run a business.”

Porirua companies represented 13% of the businesses surveyed.

Porirua mayor Anita Baker said her district seemed to be faring better than the survey indicated.

“I know the coffee shop businesses are noticing it’s quieter in the city centre, but engineering and places like that, they’ve got two years worth of forward contracts, so they’re really busy.”

Baker said many industries were struggling to find staff, but “business confidence seems really good at the moment”.