Business confidence up 22%

Business confidence in New Zealand is 22% higher than last year in a Grant Thornton IBR survey and businesses here are 10th in the world optimism table.

Pam Newlove, Co-Chair and Partner, Grant Thornton New Zealand Ltd, said that business confidence has lifted 22% on this time last year to 58%, well ahead of neighbours, Australia, where confidence was up only 7% to 31%.

“New Zealand business owners have accepted that the tough grind we’ve been going through over the last couple of years is the new norm and they are just knuckling down and doing the business. They have learnt to be smarter about how they do business rather than lament the recent difficult times. Successful operators are identifying their niche products or services and capitalising on opportunities and securing market share that way.

“Australia may not have suffered the level of pain that we endured during the global financial crisis, but with the slowdown of China and the fall in commodity prices, indicators have turned south in the ‘lucky country’ with a slew of major redundancies in some of the larger companies.

“Employment aspirations show that 34% of New Zealand companies are looking to employ more staff in 2013 compared with only 8% in Australia.”

New Zealand companies have almost twice the level of optimism currently being experienced in Australia when it comes to forecast revenues and profitability.

“Seventy per cent were expecting increased revenue over the next 12 months and 58% were expecting an increase in profitability. For Australia the figures were 36% and 34%, another indicator of the shape of their economy,” she said.

Lack of skilled labour (38%) red tape (31%) and a shortage of working capital (28%) were all cited as constraints to growing and expanding businesses.

“Red tape is interesting, although it is noted as a constraint, it is less of a concern in this country compared with many others. Interestingly, New Zealand is often seen as an easier place to do business relative to other jurisdictions.

“The overall picture is one of an improving economy but there are some key messages that have come out of the survey. Businesses must look after and retain their good staff, continue to educate and upskill them and continue to invest energy and time into maintaining and managing customer relationships,” she said.

The global outlook is less optimistic.

. . . The IBR reveals that global business optimism stands at just net 4% heading into the New Year. This halts a rally in confidence seen in the first half of 2012, when global business optimism reached 23%, and brings it nearer to the 0% level observed this time last year.

The fall in global business optimism has been largely driven by a huge fall in the world’s largest economy, the United States. Optimism amongst US business leaders climbed to 50% in Q2 this year, but slumped back to -4% in Q4 – the lowest since the depths of the financial crisis. Expectations for increasing revenues (down 10 percentage points) and profits (down 9) both fell sharply over the past three months. This chimes with research from Grant Thornton US which suggests 40% of CFOs have delayed decision making because of fiscal cliff concerns.

Ed Nusbaum, CEO of Grant Thornton International, said: “There is no question that protracted negotiations over how to resolve both the sovereign debt crisis in the Eurozone and the fiscal cliff in the United States have weighed heavily on business confidence over the past six months. With the economic outlook clouded by these issues, business investment becomes a much riskier proposition for many.

“The hope, both in the United States and around the world, is that these issues can be resolved and that this drop in confidence is temporary rather than the start of a longer decline.”

We trade with these countries and economic problems for them will affect us.

However, thanks to those so called failed policies of the 80s and 90s and current government efforts to reduce debt and promote export-led growth businesses have reason to be more confident than last year.

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One Response to Business confidence up 22%

  1. Andrei says:

    Aha – just the thing to warm the cockles of a man’s heart on a fine summers brisk winters morn.

    It is pleasing to learn that Peruvian greengrocers feel optomistic about their prospects for the coming year, a trifle more optomistic perhaps than Georgian jewelry manufacturers and wine distributers.

    New Zealands somewhat lower score is no doubt boosted by the purveyors of the finest bullshit for whom the coming year bodes well.

    Things are a little less rosy for South Dunedin boilermakers though, their jobs have gone west, the benevolent Government has put up the price of their smokes (for their own good you understand) and will further restrict their movement later this year by raising taxes on petrol to fund roads into Wellington and Auckland so that bullshit wholesalers and public servants may travel more freely to and from the places where they ply their trade and the places where they live and recreate.

    Never the less there is one bright spot in an otherwise bleak year for South Dunedin’s now unemployed boilermakers, within the year their sons will finally be able to marry their boyfriends, if they so desire – something I’m sure that will cheer them all up

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