Business confidence trends downward

Dougal McGowan.
Dougal McGowan.
Expectations the New Zealand business situation will improve fell in the three months ending September, according to the Otago Chamber of Commerce business survey.

Chamber chief executive Dougal McGowan said yesterday there were three main causes for the fall in expectations.

They were: business had slowed for some of his members since August because of election worries; businesses were losing good staff; and staff salary expectations were causing business owners ''headaches''.

''Salaries are causing members to lie awake at night.

''Staff are asking to be paid more, but even though businesses are busy, profit margins have not expanded. Any extra cash is being absorbed by things like health and safety requirements, a huge cost for construction firms.''

Firms also worried about finding good staff to help expand their operations.

The survey was completed two weeks ago and 10% of the chamber's membership responded, he said.

Expectations for an improved business situation fell to 28.4% in September, down from 35.6% in June.

Expectations the situation would deteriorate during the next six months were up substantially to 21% from 3.5% in June.

About 43% said conditions would stay the same, down from 56% in June.

Mr McGowan said expectations about respondents' own business situation continued to indicate a positive outlook and 55.2% said that their own situation would improve.

Only 28.4% said the situation would stay the same, down from 42.7% and 9% said it would deteriorate, up from 3.5%.

Nearly 39% of respondents said profitability had gone up, 37% said it had remained the same and 19% said it had gone down in the past three months, he said.

''Businesses have indicated the most limiting factor for them to expand their businesses is demand at 39% and capacity at 20%.''

The highest area of concern for business in the next six months had been identified as staff costs at 48.4% followed by other factors at 31.2%. Other factors had been noted most commonly as the government and what to expect from it, Mr McGowan said.

Across the Tasman, Australian companies were experiencing very strong business conditions but their improving profits were not strengthening the broader economy, a new survey showed.

National Australia Bank's September business survey of business conditions found the construction industry was experiencing the best business conditions, while retail remained problematic.

Retail conditions were in negative territory and trending lower.

While overall business conditions for the month were significantly above the long-term average, and just below peaks experienced before the Global Financial Crisis, confidence remained weak.

NAB's survey found business confidence had improved only slightly from a sharp drop in August and appeared to be going down again.

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