Rural boom starts to slow

By JIM EAGLES business editor

Provincial businesses are noticeably less optimistic about the economy than they were three months ago - indicating that the rural boom which has driven the economy is tailing off.

The Auckland Regional Chamber of Commerce's latest quarterly survey of businesses from Taupo to Northland - excluding Auckland - records a significant drop in economic confidence at the end of last month.

Plans to invest in Machinery, spend on building or employ extra fulltime staff are all significantly down.

For the first time this year provincial businesses are less confident than their Auckland counterparts who took part in a companion survey (Business Herald, December 5).

The provincial survey found that businesses optimistic about economic prospects for the next six months exceed by 14 per cent those that are pessimistic. But that was well down on the net 26 per cent optimism recorded in the survey in August.

A similar fall in confidence about respondents' own businesses was recorded, from a net 56 per cent that were optimistic in August to a net 38 per cent.

Other findings also pointed to an easing of economic growth in the provinces.

In August a net 17 per cent indicated they expected to invest more in machinery in the following three months. By last month that had turned around to a net 23 per cent expecting to invest less.

Similarly, in August a net 6 per cent thought they would spend more on buildings. In the latest survey a net 17 per cent predicted they would spend less.

The number of firms expecting to hire more fulltime staff is down by a net 3 per cent.

The survey also found business generally expected fewer hours to be worked, reduced profitability, lower sales and lower exports.

Optimism was highest in Waitomo (where a net 54 per cent see better times coming) and Eastern Bay of Plenty (34 per cent).

The least confident areas were Taupo, where a net 6 per cent thought things were getting worse, and Rotorua, where optimism outweighed pessimism by 4 per cent.

Chamber of Commerce chief executive Michael Barnett said the survey results indicated that "recent signs of falling world commodity prices coupled with the generally cautious international outlook ... have generated a note of caution in provincial areas".

It was a particular concern that in spite of the interest rate cuts by the Reserve Bank "investment intentions appear to be well down on indications in previous surveys".

The responses showed there was plenty of work to be done to persuade business to be more positive.