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Auckland’s Business Confidence Bounces Back

Auckland’s Business Confidence Bounces Back

Auckland’s businesses are emerging from a six-month period of ‘wait and see’ in a new burst of optimism.

Figures from the latest Auckland Chamber of Commerce Economic Business Survey show 24 per cent (24%) of Auckland businesses believe the general business situation in New Zealand will improve over the next six months. Fifty-four-per cent (54%) are picking a plateau.

When it comes to their own business outlook, respondents are even more confident. Fifty three per cent (53%) believe their own business situation will improve over the next six months, and 35% say their situation will remain the same.

These figures were more optimistic than in June, when just 16 per cent (16%) of businesses picked a better six-month outlook for general business in New Zealand, and half thought it would be the same.

Significantly, there has been a twelve per cent (12%) drop in the number of respondents who believe the general business situation will worsen in the next six months.

These are among the main findings of a regular survey of Chamber of Commerce members on how they view future business.

Commenting, Chamber of Commerce Chief Executive Michael Barnett says it is pleasing to see that Auckland’s economic confidence is alive and well.

“Those results are a positive signal that Auckland business is becoming more confident in New Zealand’s economy, and show that business confidence has bounced back from the uncertainty that has been evident in the past couple of surveys.”

However, Mr Barnett says: “It is disturbing to note that many businesses, particularly those in the manufacturing, hospitality and tourism sectors, find it difficult to attract and recruit suitable staff. This continues to be a huge concern for business.”

Forty per cent (40%) of those surveyed say that it is harder to find staff now than three months ago. There is particular difficulty in finding skilled staff in the manufacturing and hospitality and tourism sectors. Forty nine per cent (49%) of respondents say it is now harder to find staff in the manufacturing sector and, in the hospitality and tourism sector, thirty per cent (30%) – a twelve per cent (12%) rise from the last quarter – are finding it more difficult to find suitable staff.

Of the more than 600 key business leaders who responded to the September survey, which was conducted between September 9 and 17, 76% say they employ fewer than 20 people.

Findings on interest rate trends over the next 12 months indicate that expectations of higher interest rates are significantly greater than those for the previous three quarters. Forty five per cent (45%) of respondents believe that interest rates will increase compared to 9% in the March to June quarter.

Other key findings: Interest rates
There is a big rise in the proportion of businesses picking an increase in the cost of borrowing over the next 12 months (45 per cent), compared with June 2003 (nine per cent). Only nine per cent (9%) now anticipate interest rates will fall, a sharp contrast with last quarter when 56 per cent predicted lower interest rates.

New investment
Investment in machinery is likely to grow over the next 12 months, with 32 per cent of Auckland businesses anticipating a greater investment in this area than over the past year.

More employers anticipate a levelling off of the number of fulltime employees (61 per cent (61%) in September 2003, compared with 56 per cent (56%) in June 2003). Part-time employee numbers are looking likely to increase, with 22 per cent (22%) of respondents noting this (19 per cent (19%) in June 2003).

Domestic sales
Higher confidence in domestic sales is emerging. Forty-seven per cent of Auckland businesses expect New Zealand sales to improve over the next three months. This compares with 40 per cent (40%) in June 2003.

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