Wellington business confidence dips but activity steady
Wellington Chamber of Commerce
Monday 21st September 2015
Wellington business confidence dips but activity remains steady
Business confidence in the Wellington region's economy has dipped over the past three months although activity remains steady, according to the latest Wellington Chamber of Commerce Business Confidence Survey.
A net 13.1 per cent of business respondents expect the Wellington economy to improve over the next 12 months, compared to 28 per cent in the previous survey in May. Of the total responses 34.9 per cent expect the economy to be better, compared with 39.8 per cent in May and 44.3 per cent in October. Just 21.7 per cent expect the economy to decline, compared to just 11.8 per cent and 15.8 per cent.
Wellington business confidence in the national economy has fallen, however the balance of sentiment remains in positive territory at 0.5 per cent. This shows that expectations and confidence has tightened, many respondents believing that the current national economic conditions will remain the same. This compares to a net positive of 40.1 per cent in May, and 42.9 per cent in October.
The survey was conducted over a three-week period in August and September.
It also showed a slight dip in personal business confidence, though remains high compared with other expectations. When respondents were asked about their own business situation, a net 42.9 per cent said they expect to see an improvement over the next 12 months – down from 45.3 per cent in May and 58 per cent in October.
Fewer businesses expect to see a boost in earnings, with a net 34.9 per cent forecasting an improvement, compared to 45.7 per cent in May and 55 per cent in October. Of all respondents, 52 per cent expect an improvement while 17.5 per cent expect earnings to decline.
The number of businesses expecting to invest more in plant and equipment over the next 12 months has also fallen but remains positive, to a net 12.5 per cent from 32.3 per cent in May. Expected activity remains steady with some 31.7 per cent expect to invest more while 19.3 per cent expect to invest less.
Staff hiring expectations were encouraging, reinforcing that businesses expect their own activity to remain steady. When asked what changes they expect to staffing numbers over the next three months, a net 28.9 per cent of businesses said they expect to be looking for more staff (35.9 per cent expect to hire while just 7 per cent expect staff numbers to decrease). This compares to 28 per cent in May. Some 57 per cent expect numbers to say the same compared with 51 per cent in May.
Finding skilled staff continues to be a challenge for businesses, with just 9.5 per cent said it was easier to find skilled staff than it was 12 months ago, with 39.2 per cent saying it was harder.
When asked unprompted what barriers or issues they believed were holding back the Wellington economy, the most common themes were:
• A frustration with regional infrastructure (28 per cent), including the cross-city congestion, lack of international air-connectivity, and issues with public transport system.
• Leadership (23 per cent), with many stressing a frustration with the city leadership, particularly around decision-making on major projects.
• Some 12 per cent of respondents said there needed to be an improved focus on economic development and forward-moving initiatives.
Wellington Chamber of Commerce Chief Executive John Milford said the results were in line with other national surveys which all showed a fall in business confidence.
“What we’re seeing is that the majority of businesses believe conditions will remain about the same, with a fairly even spread as to whether the economy will decline or improve. Wellington business confidence has dampened but activity remains steady in part due to inflation remaining very low and interest rates tipped to continue to drop. It’s encouraging to see stable business intentions around hiring of staff, and that suggests many expect to be holding their own into the near future.
“These numbers around hiring are not too dissimilar to the Manpower Group nationwide survey of earlier this month, which showed a record number of employers – some 79 per cent of those surveyed – have no intention of changing staff head counts.
“These numbers echo what I have been hearing around town – it’s a mixed outlook but they’re still feeling confident about their own business with more soon to be looking to hire and invest.”
Eds note – Net percentage is the balance of sentiment, positive minus negative responses.