The Christchurch rebuilding effort and strength in the
agriculture sector are underpinning expectations by more than
70% of South Island businesses that revenues will increase
this year.
A survey in the Grant Thornton international business report
showed 73.20% of South Island businesses expect an increase
in revenue or turnover. That compares to 65.4% in the North
Island.
Christchurch-based Grant Thornton partner Simon Carey said
that, overall, 65% of southern businesses were ''very or
slightly optimistic'' compared with 57.2% in the North
Island.
The Christchurch rebuilding effort was a major factor in the
growing confidence, he said in a statement yesterday.
''Last year, I think it's fair to say that many businesses
have been watching from the sidelines as they wait for the
city's blueprint to be finalised and the way cleared for
rebuild activity,'' he said.
Mr Carey said while Christchurch's rebuilding would have a
significant positive impact on the South Island economy for
many years to come, the importance of the agricultural sector
cannot be underestimated.
''Commodity prices remain strong and dairy numbers are
growing,'' he said.
Last week's first GlobalDairyTrade auction for 2013,
recovered losses from the tail-end of last year, with the
price of dairy products rising 2%. The average winning
trade-weighted price increased to US$3357 ($NZ4034) per
metric tonne from US$3311 from the December 19 sale, APNZ
reported.
Mr Carey said with large irrigation schemes, such as Central
Plains Water, about to begin, the importance of agriculture
in the South Island would continue to grow.
''Over $1 billion is earmarked for investment in irrigation
in Canterbury alone over the next few years,'' he said.
Both South Island and North Island businesses expected
profitability to increase, 64.90% and 67.30% respectively,
while 26.80% and 24% think it will remain steady, he said.
Mr Carey said that confidence was reflected in the intention
of 66% of South Island firms, North Island 51%, to increase
investment in plant and machinery, while 47.40% in the south
and 34.60% in the north were planning to increase their
number of employees.
Mr Carey said almost half the businesses surveyed, 48.50%,
did not expect the cost of finance to pose any constraint to
expansion and another 19.60% saw it as a minor impediment.simon.hartley@odt.co.nz
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