Auckland's business confidence cracks

By JIM EAGLES

A dramatic fall in Auckland business confidence has been recorded in the Auckland Chamber of Commerce's latest survey of its members.

The returns from 550 businesses, released today, show confidence in the general business outlook has gone from a net 32 per cent positive a year ago, to 3 per cent positive three months ago and 22 per cent negative now.

The net figure aggregates positive and negative responses.

Those business-confidence figures are following the same sharply downward path as the latest consumer-confidence surveys.

A One News/Colmar Brunton poll published on Sunday found confidence in the economic outlook has dropped from net 32 per cent positive a year ago, to a net 11 per cent positive three months ago and 18 per cent negative now.

The Westpac McDermott Miller Consumer Confidence Index published yesterday included a finding that expectations of the economy over the next 12 months have gone from a net 22-23 per cent optimism both a year ago and three months ago to a net 6 per cent pessimism now.

Auckland Chamber of Commerce chief executive Michael Barnett said the survey findings were probably predictable but were still bad news.

"It is very obvious from our survey that Auckland's economic fizz has gone flat," he said.

"Among the drivers are clearly the international situation, the America's Cup loss and the encroaching negative impact on Auckland of lower commodity prices for exports and the higher dollar."

Barnett said the findings in Auckland reflected nationwide surveys, which had been showing increasing pessimism since October.

"It is as if Auckland is now catching up with the rest of the country. Our economic Indian summer has ended."

The chamber's survey shows the steady slide in optimism in recent months has now turned into a collapse.

The number of businesses expecting conditions to improve over the next six months has fallen from 40 per cent a year before and 30 per cent just three months ago to 14 per cent last week.

On the other side of the coin, the number expecting things to get worse has jumped from only 8 per cent a year ago, to 17 per cent in December and 36 per cent now.

Asked about the prospects for their own businesses, respondents were much less negative, but the same pattern was apparent. In March last year a net 59 per cent thought things would improve over the next six months, by December that was down to 50 per cent and the latest survey shows net optimism down to 42 per cent.

Other responses from the survey reinforce the gloomy trend.

Businesses again reported difficulty getting suitable staff.

Of the businesses surveyed, 38 per cent said it was getting harder to hire skilled staff and 13 per cent said it was also harder to find unskilled staff.

Only 6-7 per cent thought it was getting easier to find the right people.

Barnett said recruitment problems had been constraining growth for some time and this "continues to be a huge worry."

The number of firms likely to take on more staff in the next year was still strong but fell slightly. The December survey found 34 per cent of businesses expected to increase staff numbers but in this month's survey that declined to 28 per cent.

Investment intentions followed a similar pattern. The number of businesses planning to spend more on Machinery was down from 32 per cent to 28 per cent, and the number planning to spend more on buildings went from 21 per cent to 20 per cent.

That is in spite of the fact that increasing numbers of those surveyed expect a drop in interest rates in the next year.

Back in December, only 9 per cent were predicting interest rates to fall but that figure is now up to 29 per cent. A further 45 per cent think interest rates will see out the year unchanged.

Barnett said the survey results showed the time had come for the Government to move from talking to action.