For release: 16 January 2019
Small firms’ confidence lifts from 10-year low
Small firms’ business confidence lifted slightly in the December 2018 quarter following the September quarter’s 10-year low, according to ANZ’s quarterly Business Micro Scope.
A net 36% of small businesses are pessimistic about general business conditions, down from 44% in the September 2018 quarter. Confidence lifted in both micro firms (0-5 employees) and intermediate-sized businesses (those that employ 6-20 employees) for the quarter, up 8% and 10% respectively.
“Pessimism still dominates small business confidence, despite the uptick in confidence in the December 2018 quarter,” said Antonia Watson, ANZ’s Managing Director Retail and Business Banking.
The composite growth measure for small firms – a proxy for GDP growth – slipped into negative territory for the first time since 2009. Weighing heavily is investment in buildings, plant and equipment (-4%) and profit expectations (-18%).
“Regulatory requirements have been the top issue for surveyed businesses for over a year now, with lack of skilled staff also a growing concern, reflecting New Zealand’s tight labour market and slowing net migration flows,” Ms Watson says.
Despite the fall in composite growth, small business’ own activity and hiring intentions both lifted 3% points, investment rose 4% points, and profits were up 1% point, showing tentative signs of an uptick.
However while the composite measure improved for
manufacturing and construction firms, confidence remains
dire for agriculture and retail businesses across New
Zealand. While activity is holding up in the agricultural
sector, employment, investment and profit expectations have
Highlights from the December 2018 ANZ Business Micro Scope survey of small firms:
[Net percentages reflect the balance of sentiment, i.e. percent positive minus percent negative responses]
• Our composite growth measure declined to its lowest level since 2009.
• Small firms’ business confidence lifted, with a net 36% of small businesses pessimistic about general business conditions, down from 44%.
• Hiring intentions lifted 3% points and investment rose 4% points.
• Regulation and difficulty finding skilled employees remain the top two major concerns for small businesses.
• The composite growth measure fell in the North, but rose in the South. South Island firms outside of Canterbury lead, with steady activity outlook and improved hiring intentions. The composite measure fell slightly across all North Island regions.