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
''This is particularly true in the manufacturing sector, and
for the majority of the quarter, also true across the
"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
''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
The country had experienced favourable economic conditions
with record low interest rates and dormant inflation, Mr Kane
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