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Confidence Freefall

3 October 2005

Media Release

Confidence Freefall

Confidence hit a 12 month low in a survey of over a thousand business respondents undertaken electronically by the Auckland Chamber of Commerce on Thursday and Friday of last week.

Key messages from the survey that asked businesses to look ahead at conditions for the next three months painted a grim picture of confidence in freefall; average costs and selling prices up and profits down.

Commenting, Chamber Chief Executive Michael Barnett suggested that although there may have been some elements of uncertainty due to the final announcement on the election outcome, the signals had been there for some time indicating that this may be an economy any incoming Government may not want to inherit. The big issue he said is that NZ needs to respond aggressively to these conditions with a long-term strategy that will re-position our economy internationally, and not just batten down the hatches because the conditions have got tough. By that I mean an action based response, not more paralysis by analysis, he said

On Confidence
- 55% of firms believed conditions for business will get worse over the next three months. Only 8% believe conditions will improve.

On Skills
- 46% of firms believe it will continue to be harder to employ the right people with the right skills. Those sectors most affected include manufacturing, professional services and the service sector. Frustrating business at present is the compromise they are having to make when employing, and the concern that some employees who know they are hard to replace developing an inflated value of their worth.

On Interest Rates
- 66% of respondents believe interest rates will rise, which for many will place added pressure on a shrinking bottom line.

Other Issues
- Investment in buildings and machinery in decline
- The high dollar for exporters ( “.70c to the USD is killing us, .60c would be great”)
- Fuel costs (distribution costs soaring)
- Consenting processes including RMA

ENDS

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