Business confidence spirals to record low, 'damaging' staff shortages

Wellington CBD. Photo / Mark Mitchell

Business confidence in central New Zealand has spiralled to a record low, with staffing shortages becoming the main barrier to business.

The latest Central New Zealand Business Confidence Survey put expectations of the New Zealand economy at a net negative of -62 per cent.

That's down from -43 per cent the last time these businesses were canvassed, the results of which were released in April.

The latest survey of 220 businesses from Gisborne to as far south as Nelson comes as inflation hits 7.3 per cent.

The 7.3 per cent increase is the highest since 1990.

The increase was largely driven by rising rents and construction costs. Prices for the construction of new dwellings increased by 18 per cent in the June 2022 quarter, compared to the same period last year.

Business Central and Wellington Chamber of Commerce chief executive Simon Arcus said confidence was now in line with the height of the 2009 global financial crisis and the onset of Covid-19.

Arcus said the downturn was being driven by an "increasingly damaging" shortage of staff across the board.

The survey found 62 per cent of respondents listed staffing as the main barrier to business, meanwhile 86 per cent said it was harder to find skilled staff than this time last year.

"Even those businesses that do report they are doing well feel that a lack of staff means a drag on their growth," Arcus said.

"That's a handbrake on the prosperity that could be delivered back to New Zealand."

One respondent described the impact of the shortage saying: "Customers still expect us to produce like we did pre-Covid. But that world just doesn't exist anymore. It's a struggle, and we're just tired."

Arcus has previously described inflation as a "wicked" issue that could not be solved overnight.

"I think what we're going to see is businesses grappling with the cost of doing business and how to pass those costs on at times to consumers. That's a real challenge in an environment where people are feeling stressed and very overwhelmed post-Covid."

Meanwhile, for the first time interest rates and access to finance was among the top concerns for businesses.