Rising costs, falling prices squash firms' confidence

Confidence among Auckland businesses has hit a new low, with firms complaining about rising costs and falling prices, according to a survey released today.

A net 24 per cent of Auckland firms expect general business conditions to deteriorate during the next six months, according to the survey by the Auckland Chamber of Commerce. Asked the same question six months ago, a net 19 per cent of firms expected conditions to worsen.

Businesses are generally more optimistic about their own prospects, with 13 per cent expecting their own business will improve in the next six months. This is a fall from three months ago, when a net 19 per cent of firms expected their business to improve.

The Chamber of Commerce said the survey paints a joyless picture of confidence in freefall, and challenging times ahead shaped by rising average costs and selling prices and declining profits. The survey of 1000 Auckland firms was conducted between Monday and Wednesday last week - just before the Reserve Bank's widely foreshadowed interest rate rise on Thursday. At the rate review, Reserve Bank Governor Alan Bollard said the chance of a hard landing was increasing. Firms said they were still having trouble finding workers, with 42 per cent saying it is more difficult to find skilled staff than it was three months ago.

The businesses also on average expect to invest less in buildings and machinery over the coming year.

The decline in business confidence in Auckland follows a steep drop in confidence in the National Bank's business outlook survey last month. That nationwide survey revealed 66 per cent of business expected conditions to worsen over the next 12 months, up from 55 per cent in the previous month's survey.

DOWNBEAT OUTLOOK

* Net 24 per cent of Auckland firms expect business conditions to worsen over the next six months.

* But 13 per cent of firms expect their own business will improve over the next six months.

* 42 per cent say it is more difficult to find skilled staff than it was three months ago