Business confidence slips to year low: survey

Confidence hit a year-low in a survey of more than 1000 business respondents undertaken by the Auckland Chamber of Commerce last week.

Asked to look ahead at conditions for the next three months, the picture business painted was of confidence in freefall, rising costs and selling prices and falling profits.

Chamber chief executive Michael Barnett said uncertainty ahead of the election tally might have influenced the result. But, there had been prior indications that this may not be an economy any incoming government would want to inherit.

"New Zealand needs to respond aggressively to these conditions with a long-term strategy that will re-position our economy internationally and not just batten down the hatches because the conditions have got tough. And by that I mean an action-based response, not more paralysis by analysis," he said.

The survey showed 55 per cent of firms believed conditions for business would get worse over the next three months. Only 8 per cent believed conditions would improve.

Almost half the firms surveyed believed it would continue to be harder to employ the right people with the right skills. Those sectors most affected by the skills shortage included manufacturing, professional services and service sector.

The chamber said businesses were frustrated by the compromises they have had to make when employing and concerned that some employees who knew they were hard to replace were developing an inflated self-worth.

Two-thirds of respondents believed interest rates would rise, which, for many, would place added pressure on a shrinking bottom line.

Businesses were reducing investment in buildings and machinery. The high dollar, now tracking near post-float highs, was hurting, as were rising fuel costs and red tape such as the Resource Management Act.