Good year seen for NZ enterprise

New Zealand small and medium-sized enterprises are set to outshine their Australian counterparts across several key measures this year, MYOB says in its latest BusinessMonitor.

New Zealand SMEs expect to outperform on confidence, revenue expectations and sector-based growth.

The MYOB Transtasman Special Report highlights New Zealanders are enjoying some of the highest levels of confidence seen over the last decade.

MYOB chief executive Tim Reed said this year both New Zealand and Australia enjoyed the prospect of improving economic conditions.

''Here, the effects of the Canterbury rebuild and growth in Auckland, combined with the rural sector's performance, are underpinning what is likely to be one of the most significant and sustained periods of growth in the country's recent history.''

The comparison report, created as part of MYOB's BusinessMonitor, highlighted Australia's SME economy falling behind New Zealand's last year, he said.

In the year to August 2013, 39% of Australian SME operators reported a fall in revenue while just 18% recorded a revenue increase. In contrast, 30% of New Zealand SMEs reported an increase in revenue in the year to August and 24% saw their revenues fall.

For Otago-Southland businesses, in the 12 months to August, 30% saw a rise in revenue, 32% saw a fall and 34% were unchanged.

For expected revenue in the 12 months to August 2014, 41% of Otago-Southland SMEs expected a rise, 15% expected to be down and 37% expected the same.

''Otago-Southland is following the same trend and considerably outstripping Australian SMEs on expected revenue this year,'' Mr Reed said.

Nationally, the differences were evident in the relative performance of key sectors. New Zealand's construction, retail, manufacturing and rural sectors were all expecting to outperform those in Australia.

The Australian manufacturing and wholesale, and construction and trades industries expected to show some of the lowest growth when compared to other industries. Only 17% of both sectors expected annual revenue to increase.

By contrast, in New Zealand, two of the sectors expecting the best performance in 2014 were construction and trades and a resurgent manufacturing and wholesale industry. Nearly 60% the manufacturing and wholesale sector expected to see revenue increase in the year to August 2014, the largest of any sector, while 44% of construction and trades businesses expected growth.

The effect of the exchange rate would likely have a major impact on the two economies, both internally and as trading partners, Mr Reed said.

''If the Australian dollar continues a gradual downward adjustment - without falling off a cliff and creating widespread uncertainty - it will likely become a trigger of improved performance across the business community.''

There was no doubt the continued strength of the New Zealand dollar created a more challenging picture for exporters, he said.

A recent HSBC Australia report stated the New Zealand dollar ''may surpass parity against the Australian dollar for the first time in four decades''.

With the core drivers of the economy remaining strong, there was unlikely to be a significant adjustment to the kiwi in 2014.

''As long as the value is tied to positive underlying fundamentals, it is likely to be a challenge SMEs are happier to live with.

''BusinessMonitor respondents ranked fuel prices as the number one pressure, and any relief in this respect will be welcome.''

Two speeds

In the 12 months to August 2013, Australian businesses experiencing falling revenue far outweighed those in positive territory. Nearly 30% of Australian SME operators reported a fall in revenue while just 18% recorded a revenue increase. Putting this into context, the proportion of operators reporting a revenue fall has been steady over three waves of the MYOB BusinessMonitor - 31% in May 2012 and 39% in February 2013.

New Zealand
In New Zealand, 30% of SME operators reported an increase in revenue in the year to August 2013, while 24% saw their revenues fall. The proportion New Zealand operators reporting a revenue fall had also been trending steadily down over three waves of the BusinessMonitor - 30% in May 2012 and 27% in February 2013.


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