Fancy That store owner Bill Campbell said the CBD is struggling. Photo / Andrew Warner
Fancy That store owner Bill Campbell said the CBD is struggling. Photo / Andrew Warner
The looming threat of Omicron is behind a "good chunk" of a drop in the Bay of Plenty's economic confidence, a new report says.
Westpac's Regional Economic Confidence latest report showed confidence in the region's economic prospects took a hit over the December quarter sliding eight percentage points to -7.
Westpac's acting chief economist Michael Gordon said Omicron most likely explained "a good chunk of the fall in confidence" as well as slipping forestry prices.
"Otherwise, the region remains on a sound economic footing, and we expect confidence to rebound over the remainder of the year," he said.
"We are still wary of worker shortages, and we will be keeping one eye on developments in this regard."
Western Bay of Plenty economic agency Priority One chief executive Nigel Tutt said the confidence drop was "no surprise".
"But, we should bear in mind that the fundamentals of our economy are still really, really strong."
Priority One chief executive Nigel Tutt, pictured addressing The Kollective, said the "fundamentals" of the Bay's economy are still going strong. Photo / George Novak
"Throughout this pandemic, all the dire predictions of economists and the like have been pretty much proved wrong. So we should take some heart that generally, we're a bit more resilient than we think."
Tutt said Omicron definitely had a role to play in the confidence drop, as well as inflation, which had "reared its ugly head".
He said the biggest challenge facing the Bay's economy this year will be "the availability of people," given many will be required to isolate due to Covid-19 infection or contact.
Bigger sectors like construction, manufacturing and healthcare were all dependent on people being on-site, he said.
"I don't think it will be as bad as people are predicting, anyway."
Tauranga Chamber of Commerce chief executive Matt Cowley said business confidence had taken a hit since mid-2021.
"Most business owners acknowledge Covid-19 for what it is, but they are more concerned with the pressing issues of labour supply shortages, rising cost of doing business thanks to high inflation, and improving small business lending rules."
He said rising mortgage rates will limit the money people can spend in retail, hospitality, and tourism businesses.
"The rising cost of doing business, due to inflation, will continue to impact businesses in a globally cooling economy.
Tauranga Chamber of Commerce CEO Matt Cowley said rising mortgage costs will impact the local economy. Photo / George Novak
"The continued success of our export sector, including the growth of the Port of Tauranga, will keep our economy steady for the rest of the year."
Red Stag Group chief executive Marty Verry was concerned about staffing.
"What is on people's minds is those disruptions, having staff out from Omicron coming into the community, and what it does to the volumes, to production."
That would be the unknown for the next few months, he said.
"We are reasonably well positioned with over 95 per cent of vaccination across our workforce."
Trevelyan's Pack & Cool managing director James Trevelyan agreed.
"That for us right now is labour and Omicron. They build on top of each other."
They were working to flatline labour demand now to reduce stress later, he said.
Trevelyan said fruit packing would begin in about four weeks and staff numbers were tight.
"But we're out there looking for people . . . every facility will be the same."
Number One Shoes manager Pam Jump said she had seen people being more restrained in their spending.
"They're spending their money on the necessities, from what I can see. We haven't really seen a big drop-off in sales, but then, people need shoes."
Jump said the business had seen an increase in people needing Winz assistance to buy school shoes.
"There are a lot of families out there who are struggling. When I sit back and say it all out loud, it probably makes sense why they think [the economy will decline].
"Hopefully it's not going to get worse, but I don't know."
Fancy That store owner Bill Campbell said there were a number of problems facing CBD businesses.
Fancy That store owner Bill Campbell said the CBD is struggling. Photo / Andrew Warner
"As far as our own business confidence, we're very negative. The CBD is struggling as a whole."
He said roadworks, construction, and lack of parking in the CBD made it hard for the local economy to thrive.
"People are habitual, and if they can't go where they want to go in a reasonable time, they'll go somewhere else."
Retail New Zealand chief executive Greg Harford said a quarter of his organisation's members weren't sure their businesses will survive the next 12 months.
Harford said spending so far this summer was "not enough to recover from the previous quarter where everyone was locked down".
Retail NZ chief executive Greg Harford said a quarter of his organisation's members are in danger of closing this year. Photo / Mark Mitchelll
He said consumers were nervous about spending as interest rates rise and physically visiting retail environments due to Covid-19, which had played "a significant part" in the drop in consumer confidence.
"People are feeling that they've got less money in their pockets. Things are costing them more.
"We just need to have a bit more certainty around jobs, because there's risk there at the moment. That will be contributing to people feeling a bit insecure."
Harford said retail was "a safe environment in traffic light red level" because of numbers limits, mask-wearing, and physical distancing.
"I'd encourage people to get out and support their local businesses to make sure that they're still there post-Omicron."
