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April 2009 - Wellington Regional Chamber of Commerce Business Confidence Survey
Wellington businesses have shown a significant improvement in confidence over the last three months according to the latest survey of business confidence conducted by the Wellington Regional Chamber of Commerce.
The mood is still pessimistic, with a net 19% of businesses expecting the national economy to deteriorate over the next six months. But this is a significant improvement from the net 52% recorded in our survey three months ago.
When asked about their own business situation, the net number of respondents expecting an improvement jumped from negative positive territory with a net 13% expecting an improvement compared with a net 16% expecting a deterioration last time.
The turnaround in confidence is consistent with other surveys but it would appear the improvement in confidence is slightly greater amongst Wellington businesses compared with the country as a whole. This is in spite of reported downsizing amongst government departments with which many businesses have contracts.
The mood amongst exporters is relatively optimistic with a net 24% expecting their earnings to improve compared with a net 16% last time. This is in spite of a reasonable appreciation of the exchange rate since then.
While the level of pessimism seems to have bottomed out, businesses intentions do not reveal significant new activity in the coming months.
While businesses say they are finding it much easier to get staff than they were three months ago, there is no real change in the number expecting to take on more staff. 23.4% said they were likely to reduce staff numbers in the coming months compared with 27% last time. The proportion expecting to make a major investment in the next 12 months, 18%, was also practically unchanged from the last survey.
Businesses are saying that banks have been slow to pass on the reductions in wholesale rates since they started falling in July 2008. 50% of respondents said their banks have not matched the reduction in the OCR over this period, 48% said they have and 2% said they have exceeded OCR cuts. The number of businesses saying they were having difficulty getting bank credit, at 17.6%, was practically unchanged from last time. The survey was taken in the two days just prior to the Reserve Bank’s 0.5% cut in interest rates.
