Business confidence in the Wellington region’s economy has recorded a sharp reversal after the drop suffered at the end of 2016
Earthquakes are cited as the single biggest impediment to growth in the local economy by 35% of respondents. This is followed by infrastructure (21% of respondents) and transport issues (20%), specifically roads and the airport.
According to the latest Wellington chamber of commerce business confidence survey, a net 52% of respondents now expect the local economy to improve over the next 12 months.
It is an improvement on the net positive of 34% in the December survey. That was itself down from 62% in September.
In the latest survey, just 7% of business respondents expect the local economy to decline, with 59% expecting it to improve and 33% says there will be no change.
The survey was conducted over a two-week period in March.
In line with the increased optimism in the local economy, many are indicating a secure outlook for their own business situation.
A net 61% of business respondents say they expect to see an improvement over the next 12 months – compared to 50% in December and 61% in September. Just 8% are pessimistic about the outlook for their own business.
Companies continue to expect a steady increase in earnings, with a net 57% forecasting an improvement, compared to 53% in December and 55% in September. Of all respondents, 66% expect an increase while just 9% expect earnings to decline.
The number of businesses forecasting more investment in plant and equipment over the next 12 months has improved to a net 44% from 36% in December. Just 5% are not expecting to invest more, while 49% say they will and 39% say they will spend about the same.
Intentions to hire staff remain high and are slightly up on December. When asked what changes they expect to staff numbers over the next three months, a net 33% say they expect to be looking for more staff, slightly up from a net 29% in December.
When asked unprompted what barriers are holding back their business, an inability to access or attract skilled staff is again the No 1 issue. This response was consistent with the Chamber’s surveys in December, September and June last year.
Chamber of Commerce chief executive John Milford says the turnaround in confidence in the region’s economy comes as no surprise.
“Confidence suffered a big hit in December after the earthquake-flood double-hit in November,” says Milford.
“Those events hit confidence hard, and though most businesses were back on their feet within days, they had an impact,” he says.
“That showed clearly in our special earthquake survey when more than 62% said they were affected by damage to premises and stock, staff and freight disruption, and a reduction in business activity,” says Milford.
“In our report in January we predicted there would be positive movement in the March survey, and we have not been disappointed,” he says.
“Though issues raised by the earthquake remain top of mind for many businesses and building owners, it’s back to business for most,” says Milford.
“GDP remains high, even if it’s come back a little, consumer spending is steady, and there are plenty of jobs available,” says Milford.
“The increase in the number of businesses indicating a secure outlook for their situation, a steady growth in their earnings, increasing investment in plant and equipment, and positivity around hiring intentions is proof that we are back on track,” he says.
