Economy Gets “No Confidence” Vote

15 December 2008

Media Release

Economy Gets “No Confidence” Vote

Despite lower taxes, interest rates and fuel prices, businesses in the Auckland region have given a no confidence vote to the economy over the next 3-6 months.

When asked the question if they considered the business situation in NZ would improve, remain the same or deteriorate, 56% believed conditions would deteriorate, a 24% increase on last quarter, and 18% believed conditions would improve.

When asked about their own business situation, 34% believed conditions would deteriorate, up 15% on last quarter, and 31% believed conditions would improve, down 16% on last quarter.

Employment conditions showed all the signs of a weakening economy, and when asked “do you find that getting staff is easier or harder than three months ago, 13% said harder, down from a year high of 45%, and 33% said easier, up from a year low of 6%.

Demand was considered by 57% of respondents to be the factor most limiting their ability to expand, with a further 21% saying finance.

In terms of interest rates, 79% of firms believed that interest rates would be lower in the next 12 months.

Further Snapshots

When asked what changes to firms expect in the next 12 months –
22% said full time employees would be down.
17% said part time employees would be down.
25% said total hours worked would be down.
16% said average costs would be down.
22% said average selling prices would be down.
47% said profitability would be down.

Typical comments from respondents included –

• The sharemarket took a lot of “old money” out of our economy and the finance/development companies have taken the “baby boomer” savings.
• Customers are finding any excuse to note pay in full or to delay payments.
• My monthly turnover is 60% of what it was a year ago.
• We should be doing more to show people how to deal with tough times – not just report that times are tough.
• People are quickly developing a resistance to spend.
• Hard times are made harder by people not paying and banks not supporting.

The survey was undertaken electronically last week over a 48 hour period and was responded to by 1500 Auckland firms.

ENDS

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