Auckland businesses in ‘survival mode’ heading into Budget week

Monday, 27 May 2024

The chamber polled businesses from sole traders through to large corporates

Fewer than 10% of Auckland firms believe business confidence is positive, according to a quarterly survey by the Auckland Chamber of Commerce.

The proportion of businesses that reported their performance was better than expected over the previous three months was also less than 10%.

About 65% of businesses said confidence was negative, an increase from 52% the previous quarter, with the remaining neutral non-committal.

Auckland chamber chief executive Simon Bridges remains hopeful the tide will turn later this year.

Top of the list of businesses’ worries for the next six months is weak consumer demand and confidence, with inflationary pressures and rising interest rates a close second.

Auckland chamber chief executive Simon Bridges said businesses were in survival mode and adjusting a new normal.

About 65% of businesses surveyed expected the country’s economic performance would tread water or decline over the coming year, little changed on 67% when their opinions were sampled three months ago.

Bridges said businesses were facing “an incredibly tough environment”, with rising costs, compliance burdens and waning confidence impacting their operations.

“Many report cash-flow issues exacerbated by inflation and high interest rates, with little relief in sight,” he said.

But Bridges said he was still “realistically optimistic there is hope for improvement in the economic climate later this year and into 2025”.

It would still be good to have “a bit of sizzle with the lean-times sausage” of the Budget, he said.

But he wasn’t expecting a lot of relief for businesses.

“The Government and the Reserve Bank have both done a pretty good job of making it clear things aren’t great and we shouldn’t get our hopes up.”

“One of the take-outs of this survey is anyone who thought things were going to be ‘magicked’ into a much better place with the election are now I think pretty clear that is not the case.”

ANZ is due to report the results of its latest monthly business confidence survey on Wednesday.

Its last survey, published at the end of April, suggested confidence in the economic outlook had fallen for the third month in a row, dipping to the lowest level since September.