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Wellington business confidence takes a hit in Chamber survey

10 November 2014

Wellington business confidence takes a hit in Chamber survey

Business confidence in the Wellington region’s economy has taken a sharp turn in the latest Wellington Employers’ Chamber of Commerce Business Confidence Survey. Confidence is now at the lowest level since August last year, after which it showed three consecutive net increases.

A net 28.5% of business respondents said they expected the Wellington economy to improve over the next 12 months, compared to a net 48% in the previous survey in June. In the latest survey, 44.3% expect the economy to be moderately or substantially better, compared with 54.3% in June, while 15.8% expect the economy to decline, compared to just 6.3% in June. In August last year, a net 27.6% expected the economy to improve, rising to 40% in December and 53.7% in March.

Wellington region business confidence in the national economy has also dropped. It is now at 42.9% compared to 72.2% in June and 76.2% in March.

The survey was conducted in mid-October over a two week period.

There was a slight improvement when respondents were asked about their own business situation, with a net 58% expecting an improvement, up from 57.2% in June. A net 55% expected their business earnings to be better in the next 12 months, with 65.8% expecting an improvement and just 10.3% expecting earnings to be worse.

A net 30.5% of businesses expect to invest more in plant or equipment for their business over the next 12 months, up from June (27.9%). Some 41.9% expect to invest more (37.3%) while 11.4% (9.3%) expect to invest less.

Some 42% of businesses expect to hire more staff over the next 12 months, virtually unchanged since June, and just 12% expect staff numbers to decrease, compared with 11% in June. A lack of skilled and experienced staff, compliance costs, and city leadership were cited most frequently as the main issues affecting business, while city leadership was also cited as one of the top issues holding back the local economy, along with the lack of international air connectivity, and costs around earthquake strengthening.

Businesses were also asked about the NZ Transport Agency’s decision to appeal against the declining of the resource consent for the Basin flyover and local body amalgamation. Some 31% said they supported NZTA’s decision, while a further 33.7% said they supported it as long as there was a ‘plan B’. Just 22% did not support the appeal.

On local body amalgamation, 70% said they supported it in some form, while 18% were opposed. Some 55.6% said they favoured the two-tier (local board representation) model, while 33% said they favoured the single tier.

When asked if the general election result had increased or decreased their expectation of the local economy 39% of respondents said it had increased their expectation, while just 11% said the result had decreased their expectations.

Wellington Employers’ Chamber of Commerce President John Milford said the survey was in line with other recent surveys which showed a drop in confidence.

“Unfortunately, like the rest of the country, confidence seems to be levelling-off right now, even though some of the signs for the longer term are good.

“Most business indicators are positive. Inflation is low and is predicted to stay that way for some time, interest rate rises seem likely to remain on hold until well into next year, and the dollar is at lower levels, and that’s good news for our exporters.

“As well, businesses are expecting to be earning more in the next 12 months and spending more on plant and machinery than they expected in the June survey, and eventually that will bode well for the local economy.”

Mr Milford said he noted that business was still very strongly in favour of local body amalgamation.

“That’s good news, because the Chamber is firmly of the opinion that a single council with a united mandate is the best vehicle to drive our economy on the back of efficiencies gained through shared services.

“These results show that Wellington businesses remain alert, and reinforce the need for both local and national government to pursue the right settings to unlock Wellington’s growth potential. There is no shortage of opportunities for the city, with a runway extension, upgrade to roading infrastructure and local government amalgamation all within grasp. We need to ensure we join up the dots, shore up sustained growth, and keep down costs to doing business.”

Net percentages reflect the balance of sentiment – positive minus negative responses

ENDS

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