Southern swell of confidence

A southern swell of confidence is set to drive record activity this year.

A record wave of business activity is set to sweep across the nation in 2014, driven by a swell of optimism from the South Island, according to ANZ’s quarterly Business Micro Scope survey of small firms. Retailing, agriculture and manufacturing are leading a lift in optimism which has seen firms’ expectations of their own activity, hiring and profitability for the coming year soar to new highs.

Fred Ohlsson, ANZ’s Managing Director, Retail and Business Banking, said:

“Rising confidence is sweeping across New Zealand, further boosting the outlook for businesses and the economy in 2014. Construction and agriculture are caught in the tail wind of the Canterbury rebuild and increasing commodity prices. But optimism is at or near historic highs across all major sectors, paving the way for a broad-based uplift in business activity, employment and economic growth.

“These factors have come together to create a sweet spot for the South Island, with optimism in Canterbury spilling over to the rest of the island whose record-high optimism now tops that of Canterbury itself. Though not quite at these levels, business confidence in Auckland also enters the New Year at a new high which bodes well for the role of our largest city in the upturn.

It is significant that optimism is at or near record high in all sectors – not just construction on the back of the Canterbury rebuild.

Highlights from the Dec 2013 ANZ Business Micro Scope survey of small firms:

[Net percentages reflect the balance of sentiment – i.e. positive minus negative responses]

• Confidence is at its highest since comparable data was first collected in 1999, with record numbers of firms expecting to up activity, hiring and profitability in 2014.

• A net +45% of firms expect to lift business activity in the coming year, double the long-term average. A net +17% plan to take on more staff and +29% expect profits to rise.

• Confidence in Canterbury (up from +21% to +27%) is spilling into the Rest of the South Island (up from +21% to +30%) which now leads the nation. Auckland firms continue to gain confidence, reaching a new high for the region of +24%.

• Services is the most upbeat sector, at +25%. Retailing recorded the largest lift in confidence (from +14% to +22%), followed by Agriculture and Manufacturing. Agriculture was the top sector for profit expectations for the first time in two years.

“These findings mirror what we’re hearing from customers: they see the approaching growth wave and are gearing up to ride it in a way that positions them better for future economic cycles. For a nation of small businesses, this spells good news for employment and the ongoing strength of our economy.”

Confidence is  vital for business investment – it’s what encourages them to take risks, including the risk of employing more people and  increasing pay rates.

It also tends to be infectious – businesses which see confidence increasing in other businesses are more likely to feel more confident about, and see new opportunities for, their own.

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6 Responses to Southern swell of confidence

  1. Armchair Critic says:

    Clearly the infectious confidence you refer to in your last two paragraphs has not reached Macraes mine. That news kind of makes the rest of the post look like, how nicely can I put it, wishful thinking.

  2. TraceyS says:

    Actually, infectious confidence is just what mine workers need. Not doom and gloom. That doesn’t create new job oppotunities.

    Your comment is rather irritating. The mine has already well exceeded its original life as predicted in 1990. Have you been singing its praises since 2003?

  3. Armchair Critic says:

    Infectious confidence won’t feed their children, or pay their mortgages Tracey. What they need for that is jobs.
    In 1990 the people responsible for predicting the life of the mine got it wrong. Perhaps you should take your irritation to them and see how much they care.

  4. TraceyS says:

    Confidence creates more jobs than negativity. Confidence is vital in fact. The mine would never have started without it. I know it was vital because I was there to see it begin.

    Without confidence there will be no new jobs for redundant workers.

    Your comment irritated me by the manner in which you used the very fresh misfortune of others. Not in a caring way, but to attack the positive message in the post.

  5. Armchair Critic says:

    People create jobs. Since you raise “starting mines” and “confidence”, the shareholders, board of directors and managers of the Pike River mine were all confident. Very confident. Point is that confidence cuts both ways. Some people see it as a good thing, and it’s my opinion that is an unsophisticated view. However, you seem to be reluctant to comment on the relevance of the Macraes job loses with regard to the post, and I’d like to think that was because you agree that Ele’s post has been shown to be wrong; the confidence is either unwarranted, or non-existent. With regard to the fresh misfortune – would you prefer if I ask you for permission and advice around the timing of my comments on these sort of issues?

  6. TraceyS says:

    I’m glad we agree that confident people (rather than the doom and gloom variety) are the ones who create jobs. It is simple, unsophisticated, but the truth is sometimes like that.

    Where we now differ is in the comparison between two mines.

    Here are the statistics for workplace fatalities:

    http://www.business.govt.nz/worksafe/research/health-and-safety-data/summary-of-fatalities-2007-2013.

    By excluding the Pike River tragedy we are left with two fatalities over seven years. As you can see, it is possible to be confident without causing death. But I don’t expect any doom gloomer will believe me. Not a single one!

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