Businesses Confidence Improves But At Risk Of Change
The latest Wellington and Central region business confidence survey shows growth and an improvement in business confidence, says the Wellington Chamber of Commerce and Business Central.
"It’s good to see business confidence has improved significantly quarter-on-quarter and that businesses are the most optimistic they have been in some time," says Simon Arcus, Chief Executive of the Wellington Chamber of Commerce and Business Central.
"But while sentiment is improving it remains fragile, perhaps best characterised as the first ‘green shoots.’ Any negative changes in the COVID environment or a stumble in the vaccine rollout could derail confidence. The result had improved considerably from the last survey in December, with all indicators now in positive territory."
Businesses’ confidence in the New Zealand economy is at net positive 14 per cent (up from net negative 8 per cent). Confidence in the regional economy is at net positive 13 per cent (up from net positive 8 per cent) and businesses’ confidence in their own business is at net positive 41 per cent (up from net positive 22 per cent).
"What this shows is that things are beginning to right themselves, but it’s clear the confidence is reliant on things continuing to go well.
"It is also a reflection that the Wellington and wider Central New Zealand region have not been as heavily impacted by the two recent lockdowns. We asked businesses how they’d fare at different alert levels and it’s clear that when we tighten restrictions it has a big impact."
At Alert Level two, over half (54 percent) of businesses anticipate they can operate as usual, with further third operating only slightly under capacity (33.7 per cent). If we were to see an Alert Level 3 scenario this drops dramatically, to just 17 per cent anticipating they could operate as usual.
"Ongoing certainty is what business needs. Just under a third of businesses (30.8 per cent) have said that it is harder to do business than it was 12 months ago, pre-Covid. Being able to continue activities through alert level changes and the hope of a successful vaccine rollout is critical for business confidence to remain buoyant.
"But there are areas of concern. When we asked members what barriers or issues they are currently facing, over a third (34 per cent) of respondents referenced staffing and skills issues, 19.7 per cent mentioned the impact and uncertainty of Covid-19, and 16 per cent made references to the border closures.
"The problems are in specialist skills and experience, not readily available in New Zealand, and with the border closed we cannot bring those skills in. Over 54 percent of businesses said it was harder now than 12 months ago, to find skilled or specialist staff.
"Specialist skills shortages combined with immigration processing delays are having a very real wellbeing impact on migrant workers and their employers. Currently, we understand over 25,000 people are waiting here in New Zealand with their skilled migrant visas backlogged. Many of these applications are for workers already in New Zealand who have no certainty around whether they will be able to stay in the country. There are more skilled migrants with the right to work in New Zealand and attached to jobs, but who were outside New Zealand or left when the border closed.
"Businesses are also having issues fixing and certifying equipment, training new staff, or growing their businesses because they can’t get critical employees across the border and into quarantine facilities. Government must address these immigration issues as a matter of urgency - both for the wellbeing of those affected and the businesses in desperate need of the staff.
"Further, the ongoing disruption to the supply chain network caused by bottlenecks at the ports continues to be a problem with 13.27 per cent citing this as a barrier to doing business.
The latest business confidence survey, complied by across the Wellington Regional Chambers of Commerce and Business Central, was conducted during a 15-day period between the 5th and 19th of March 2021. The quarterly survey was sent to Wellington Chamber of Commerce and Business Central members across New Zealand - from Gisborne and New Plymouth down to Nelson. There was a total of 250 responses.
The next quarterly business confidence survey will take place in May 2021.