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New Zealand well ahead of Australia in business confidence

Media release
11 July 2013
New Zealand well ahead of Australia in business confidence

New Zealanders looking across the Tasman at the “lucky country” and thinking their futures lie there might have second thoughts following the recent Grant Thornton International Business Report (IBR).

Not only does it show New Zealand business confidence levels are nearly five times higher than Australia, but in other key areas such as employment, profitability and exports our Tasman neighbours lag well behind.

Paul Kane, partner, Privately Held Business, Grant Thornton New Zealand Ltd, said the second quarter figures for New Zealand remained strong against the rest of the world, but with some softening in two key areas - employment and profitability.

“Of the 44 countries surveyed New Zealand ranks seventh in confidence at 60%, behind Chile 88%, Peru 86%, United Arab Emirates 86%, Philippines 84%, India 75% and Mexico 62%.

“Australia on the other hand is ranked 31st on 13%, having dropped 10% since the first quarter of 2013. New Zealand dropped only 1% in that time.

“That’s a substantial drop for Australia and reflects the impact of the slow down of China on their economy, especially mining, and the tense local political scene with their impending general elections,” he said.

The big international movers in the last quarter, and what will be good news to New Zealand exporters, is the lift in business confidence levels in the United States, up 24% to 55%, a place behind New Zealand, and a 35% increase in the United Kingdom, which lifted their confidence to 34% overall.

“The one area of concern for the New Zealand economy is the decline in the number of companies looking to increase staff over the next 12 months. Although it is still a healthy 20% and we sit roughly at the mid-point when compared with other countries, it has dropped 9% in the last quarter and is down 10% on this time last year.

“Australian figures were twice as bad with a 16% decrease compared with last quarter to 12%.

“This significant decline is probably due to the lack of confidence on the economic front in Australia (46% uncertainty) in comparison to New Zealand’s (24%).  Companies are not going to hire new staff if they don’t know where the economy is going,” he said.

Not surprisingly, New Zealand businesses were well ahead of their Australian counterparts with a strong 58% thinking profits would increase in the next 12 months compared with 32% in Australia. For New Zealand this was slightly down compared with the first quarter.

“Our exporters are also more bullish than our Australian counterparts, despite our overvalued dollar. We were at 18% compared with Australia’s 11%.

“While there is still some uncertainty internationally of where the global and national economies are heading, New Zealand is well placed on all fronts which should see our confidence levels compared with both Australia and other countries remain relatively strong,” he said.


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