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October 2010 - Confidence has picked up slightly
The latest Wellington Employers’ Chamber of Commerce’s quarterly business confidence survey shows confidence has picked up slightly but flat sales and a lack of demand is still a concern.
A net 40% of businesses expect their situation to improve over the next six months. This is made up of 53% expecting an improvement and 13% a deterioration. This is a small turn around on the net 35% the last time we did the survey three months ago.
When asked what the key issues facing their businesses, lack of demand and revenue pressures were most commonly cited. This is consistent with economic data which shows that consumer spending remains subdued.
A shortage of skilled staff was also cited as a concern by a large number of respondents. Labour shortages have been easing somewhat over the recent recessionary period but the survey showed that more businesses are finding it harder to find skilled labour. It comes as official September quarter labour market data shows declining unemployment.
20% of businesses said they expect to increase their number of full time employees in the next three months compared with the 12% who are expecting to reduce numbers.
26% of respondents expect to make a major investment in plant or equipment over the next 12 months slightly lower than the 29% last time the question was asked.
It is significant that respondents continue to be more pessimistic about the Wellington economy than they are about the national economy as a whole and is likely to be due to the short term impact of government belt tightening. A net 32% of businesses expect the Wellington economy to improve over the next six months compared with 38% expecting the national economy to improve.
The outlook for exporters is consistent with businesses generally. A net 27% expect an improvement down from 30% last time. Due to exchange rate movements exporters to the Australia market are generally faring better than those with sales denominated in US dollars.
The survey was undertaken after both the successful resolution of the Hobbit standoff and the most recent Reserve Bank OCR review.
