25 June 2007
Media Release
Business confidence nosedives
Confidence hit a 12 month low in a survey of over 1000 business respondents undertaken electronically by the Auckland
Chamber of Commerce early last week.
Key messages from the survey that asked businesses to look ahead at conditions for the next six months painted a grim
picture of confidence in freefall fuelled by falling demand, skill shortages and deep concerns about high interest rates
and the exchange rate.
Commenting Chamber Chief Executive Michael Barnett suggested the findings reflected an economy that was becoming
increasingly conditional and therefore promoting uncertainty.
“At the moment there is uncertainty around issues of interest rates and exchange rates, there is a growing number of
businesses who cannot find either skilled or unskilled workers and there remains a large number of businesses who
believe the Government should have done more with taxation than they did in the last budget.
NZ needs to respond aggressively to these conditions that have emerged over the past 3-6 months with a bold, innovative
strategy that will re-position our economy internationally, and not just accept that businesses should batten down the
hatches because conditions have got too tough.
By that I mean an action based response that lowers the attractiveness of our high interest rates to global currency
traders, addresses skill shortages and encourages exporters to be positive about their long-term prospects.”
On confidence
- 40% of firms believed conditions for business will get worse over the next six months, up from 21% of this view last
March and matching the situation a year ago. Only 18% believe conditions will improve, compared to 27% of this view in
the March survey.
- 19% of businesses believe their own situation will get worse over the next six months, up from the 11% of this view in
March and matching the 18% of this view a year ago. In contrast, 42% of firms believe their own prospects will improve,
compared to 55% saying this just 3 months ago. The most persistent issue affecting individual businesses is the
difficulty finding suitable staff.
On skills
- 42% of firms believe it will be harder to employ people with the right skills, compared to 37% of this view a year
ago. Those finding it difficult to recruit unskilled workers also increased, from 15% a year ago to 17%. Those sectors
most affected are manufacturing, technology and trades.
On interest rates
- 86% of respondents believed interest rates will rise, which for many translates in to reduced intentions to invest in
expanding the business and added pressure on a shrinking bottom line.
ENDS