Businesses expect improvement next year

“It has been an unpredictable year - a real hard slog” - Otago Chamber of Commerce chief...
“It has been an unpredictable year - a real hard slog” - Otago Chamber of Commerce chief executive John Christie Photo by Linda Robertson.
Otago Chamber of Commerce members were looking forward to 2011 with expectations of an improvement in their business fortunes, chamber chief executive John Christie said yesterday.

"People are just over this year. It has been an unpredictable year - a real hard slog.

"There has been a lot of gloom and doom talked about, and there are some big numbers associated with the Government deficit."

Releasing the latest chamber confidence survey results, Mr Christie said the big question on the minds of members was how long before they could see an improvement.

They accepted there would be no fast return, but most of the survey respondents expected to see greater opportunities in the next three to six months.

One of the dichotomies of the economic recovery was the part consumer confidence would play, versus improved export and tourism earnings, he said.

The Government wanted New Zealanders to pay down debt and save more, but at the same time was reliant on the tax generated from domestic economic activity.

"We have to do all we can to have a diverse and balanced economy, but there needs to be a balance between savings versus spending."

The main points of the survey showed that business confidence had dropped in three months to December 15 compared with the September quarter.

However, as expected, sales had increased in December as Christmas shopping started.

Mr Christie said sales and business expectations were usually up in December, but he understood from talking to members that "pockets" of retail and hospitality were still struggling.

Consumers had altered their discretionary spending habits. Most households still had the same income levels, or higher, with tax cuts and pay rises included.

But the households had adopted the constant message of reducing debt and that had flowed on to retailers and the hospitality sector, he said.

The survey showed that profitability had increased again in the latest survey period but continued in negative territory.

Of businesses surveyed, 14% indicated they were looking at increasing the number of full-time employees during the three months ended March, with 6% saying they might need to reduce their staff numbers.

Among owners of businesses, 40% of respondents said their own business situation would improve in the next six months, while about 13% said it would deteriorate.

Mr Christie said people with their own business were always more optimistic about their own prospects than the general New Zealand situation.

"That's where the decisions are made about taking on more staff or outlaying more capital."

Expectations of wage increases were low with more than 61.6% of respondents indicating they were only considering no increases at all, or increases below 2% over the next year.

Forward orders were increasing, but Mr Christie said people he had contacted said the orders were not as strong as they were two years ago, when the "books" were full for 12 months to 24 months.

There was now a much shorter lead time for orders.



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