Latest surveys a big boost for confidence

Chamber of Commerce chief executive Michael Barnett. Photo / Paul Estcourt

Two surveys this morning suggest confidence is rapidly returning to the economy.

A survey of 700 Auckland businesses shows a strong surge in confidence and hiring intentions.

On the consumer front, meanwhile, confidence has surged and is at its highest level since January 2008 when the economy started in recession.

BUSINESS OUTLOOK

The online survey by the Auckland Chamber of Commerce for the three months to September found 58 per cent believe business conditions for the region will improve in the next six months, almost double that of the June quarter survey.

Those who think conditions will deteriorate dropped from 27 per cent to 6 per cent.

For their own businesses, 64 per cent believe conditions will improve, up on 46 per cent in the last survey.

The chamber's chief executive, Michael Barnett, said the findings reflected improved sentiment and business' actual trading performance.

Sentiment was helped by the Christmas buildup and the reduced flow of bad economic news.

"The confidence I see is that it's not getting any worse so people are planning for better levels of activity."

Industries associated with building and construction and car sales were the least optimistic.

Barnett said there were strong indications that with improving business conditions finding people with the right skills would become increasingly difficult.

Those firms finding it easier to employ the right skills had dropped from over 40 per cent in the June quarter to 28 per cent in September.

Nineteen per cent of firms in the survey intend to boost staff compared with 14 per cent in June.

After weak demand, difficulty getting finance was the single biggest impediment to growth. Just on 23 per cent of firms cited this as a problem. Fluctuations in the Kiwi dollar were also hitting those surveyed.

Barnett said businesses had rapidly implemented tighter controls late last year and were now in better shape to handle any economic setbacks.

"There's quite a good discipline around businesses and they will need to be able to maintain that should there be any volatility in the recovery."

CONSUMERS BUOYANT

The mid-September Roy Morgan Consumer Confidence Rating rose 5.5 points to 120 and is 10.1 points higher than a year ago.

This large rise has been driven by the increasing confidence New Zealanders have about both the short and long-term future.

Now 56 per cent (up 5 per cent - and the highest since March 2008) of New Zealanders expect to be 'better off' financially in a year's time compared to 12 per cent (down 5 per cent - and the lowest since January 2007) that expect their family to be 'worse off' financially in a year's time.

Over the next 12 months 47 per cent (up 5 per cent - and the highest since April 2007) expect 'good times' economically for the country while 28 per cent (down 3 per cent - and the lowest since December 2007) expect 'bad times.'

A majority 64 per cent (up 5 per cent - and the highest recorded) 'good times' for New Zealand during the next five years compared to 13 per cent (down 1 per cent) who expect 'bad times.'

Looking back over the past year, 25 per cent (up 2 per cent) say that their family is 'better off' financially than a year ago compared to 43 per cent (down 2 per cent) that say their family is financially 'worse off' than a year ago.

In terms of buying major household items now 45 per cent say now is a 'good time to buy' major household items while 42 per cent, say now is a 'bad time to buy' major household items.

"Clearly as New Zealanders become more confident about the future the chances of growth returning to the economy increase - the latest figures showing that 42 per cent say now is a 'good time to buy' major household items are also a strong pointer to improving retail sales in the weeks ahead." a Roy Morgan spokesperson said.

This survey was conducted from August 31 - September 13, 2009, across New Zealand by telephone with a cross section of 1,058 people aged 14 and over.

These results are part of a twice-monthly survey, and are the final set to be published before the quarterly Westpac McDermott Millar survey is published next Tuesday. The Roy Morgan survey is usually an excellent predictor of the Westpac results.

- additional reporting by INTEREST.CO.NZ