Confidence slides as pessimism climbs

By JIM EAGLES

Business confidence in Auckland is continuing to slide - in spite of the spending boost expected from the America's Cup and Christmas shopping.

The latest Auckland Chamber of Commerce quarterly survey of businesses in the region shows that business sentiment is still slightly positive. But optimism outweighs pessimism by just 7 per cent, compared with 32 per cent at the start of the year.

Auckland still looks to be more confident than the country as a whole - the National Bank's monthly business confidence survey for September has business confidence nationwide negative by 21 per cent - but the chamber's survey suggests it is sliding fast.

Chamber chief executive Michael Barnett said the latest figures confirmed a definite downward trend in business expectations.

"When you think that America's Cup racing is just getting under way and Christmas shopping is just around the corner it suggests the underlying business environment is not at all favourable."

The result was a timely wake-up call for the Government, he said.

"Clearly if the role of Government is to set a positive environment for business to work in, this survey shows the previous Labour-led Government made no impact whatsoever."

The survey, conducted last week and involving 639 mostly small businesses, found that only 27 per cent of respondents expect the general business situation to improve in the next six months, down from 35 per cent in June and 40 per cent in March.

The proportion expecting it to deteriorate rose from 8 per cent in March, to 15 per cent in June and 20 per cent now.

As is usually the case, respondents were much more optimistic about their own businesses, but even there the downward trend was apparent. In March optimists outweighed pessimists by 59 per cent, by June that had slipped to 56 per cent and it is now at 48 per cent.

The survey indicates that one reason for the fall in confidence is that businesses in the region are finding it increasingly difficult to employ skilled workers.

In November last year the survey found that 33 per cent of businesses were finding it harder to get skilled workers but in successive surveys that has climbed to 36 per cent, 37 per cent and now 39 per cent.

The problem is particularly severe in the hospitality industry, where 69 per cent of firms said it was harder to get skilled staff, manufacturing (51 per cent) and distribution (46 per cent).

The one sector finding it easier to recruit is the technology and communications area which has been hit by an international downturn.

Barnett said the growing shortage of skilled staff was a major block to economic growth.

"The warning about the difficulty of finding suitably skilled staff has been a feature of the survey for the past two or three years," he said. "Clearly this survey shows that we are not solving the problem but the situation is continuing to get worse."

In Dialogue tomorrow Economic Development Minister Jim Anderton and Chamber of Commerce chief executive Michael Barnett discuss Auckland's business confidence.