The results of the final Business Canterbury Quarterly Canterbury Business Survey for the year highlight a turnaround in key business confidence metrics following a slump in August. The last survey was in the field just weeks before the General Election, and the results reflected mounting uncertainty about the economy.
Results this quarter show that businesses are now looking ahead to a government that can kickstart the economy and quickly implement fit-for-purpose policy settings that better enable productivity, innovation, and sustainable growth. The biggest concerns were inflationary pressure and rising interest rates, consumer confidence and demand, increased compliance costs, labour market constraints, and productivity and growth.
Businesses expecting the same or stronger financial performance over the next 12 months bounced back to 85%, the highest it has been over the last six surveys. Looking at the broader economic outlook, a net 57% of businesses are now positive about the future strength of the New Zealand economy, up from -6% in August.
Despite generally improving business confidence, Chief Executive Leeann Watson says staff hiring intentions and investment expectations remain flat. “Hiring intentions and investment expectations and are still far from what we were seeing six and nine months ago. Flat investment expectations are likely a consequence of concerns about consumer confidence and demand, which came through as the second biggest barrier to growth in this survey.”
Ms Watson says staff hiring intentions are more complicated. “Despite lingering labour market constraints, businesses will be weighing up their ballooning wage costs, with 43% telling us they are the biggest driver of rising costs right now. However, we should start to see wage costs level off and hiring intentions grow as the Christchurch migration boom continues, bringing with it a huge pool of new skills and experience, increased demand for our goods and services, and an easing of labour market constraints currently driving up wages.
“Another positive coming through strongly is the resurgence of our tourism sector, with the start of the cruise ship season and introduction of new direct flights from big international markets noted as driving spillover benefits for businesses right across Canterbury.”
Increased compliance costs remain a concern, with a third of businesses surveyed saying they are one of the top three barriers to innovation, productivity and growth.
“A particular compliance bugbear for businesses is the Holidays Act, which is incredibly challenging for businesses that employ staff on casual or part-time contracts, affecting those in manufacturing, retail, hospitality, and the primary industries,” says Ms Watson.
“When we asked what businesses would like to see delivered by local government, the answers that came through were clear. Enhancements to infrastructure and roading are essential, as well as better management of spending to keep future rates rises sustainable.”
