Southern employers optimistic

John Scandrett.
John Scandrett.
South Island bosses are more optimistic and more generous than their North Island counterparts, according to the latest Grant Thornton International Business Report.

The survey, undertaken during the first quarter of this year, showed 21% of South Island employers were considering increasing salaries by more than inflation this year, compared with only 13% in the North Island.

More North Island bosses also expected to hold current rates - 15% did not expect to increase salaries this year, compared with 12% in the South Island.

Grant Thornton partner Paul Kane said the report demonstrated the buoyancy of the South Island, where 40% of businesses were very optimistic about the year ahead, compared with 30% for the North Island.

Nearly half of the businesses in the South Island expected to hire more people in 2014, compared with 31% in the North Island, almost identical figures to what actually happened last year, he said.

Otago-Southland Employers Association chief executive John Scandrett said when he saw the survey results, he decided to run an ''informal ruler'' over the national and regional manufacturing and service sector performance outcomes for the comparable 2014 first-quarter period.

The broad objective was to check out if the South Island bosses' buoyancy, as captured in the Grant Thornton comments, aligned positively with the southern Performance in Manufacturing Index and the Performance in Service Index results seen recently.

''In a nutshell, the answer is that our own surveys do indeed bring forward a higher level of South Island commercial sector sentiment, in overall terms, than seen in the North Island.

''This is particularly true in the manufacturing sector, and for the majority of the quarter, also true across the services activities.

"Given this situation, we could realistically draw the conclusion that South Island business operators will be closely focusing on all the key elements governing employee retention,'' he said.

Mr Kane said there were several other aspects of the report demonstrating the strength of the South Island economy.

Three quarters of South Island businesses expected greater profitability this year compared with 64% in the North Island while 29% of South Island businesses and 19% of North Island businesses expected to invest in new buildings.

Fifty-six percent of South Island businesses and 51% of North Island businesses were expecting to invest in plant and machinery.

''This buoyancy is definitely putting a strain on the availability of skilled workers in the South Island, with 21% being very pessimistic about attracting suitable staff, compared to 8% for the North Island.''

The Canterbury rebuild was a factor in the buoyancy, he said.

While plenty of investment was being put into infrastructure in the North Island and the Auckland housing construction, it probably did not match what was happening in Christchurch.

The picture for agriculture was ''pretty rosy'' for both islands.

The country had experienced favourable economic conditions with record low interest rates and dormant inflation, Mr Kane said.

However, it was about to enter a new cycle with interest rates starting to rise and inflation stronger.

In the short term, that should have little effect on New Zealand business confidence levels but if interest rates started to accelerate, there might be a softening in confidence.

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