Small businesses in New Zealand are losing confidence in the economic environment, but remain optimistic about their future propositions, according to ANZ’s quarterly Business Micro Scope survey.
Overall, the survey found the strong rebound of the first quarter of 2016 saw Kiwi business owners lose a lot of confidence. Even so, measures of small business activity are still above historical averages in all sectors except agriculture, and businesses remain optimistic about the possibilities available to them, and their intentions to hire and invest.
According to the ANZ survey, a net 20% of small business owners say they expect to do more business over the coming year.
John Body, ANZ managing director retail, business banking and wealth, says, “Though they’re more cautious about the current environment, small firms are telling us they’re still feeling good about their own activity and expect to expand, take on staff and do more business.
“These are key indicators for growth, which bodes well for the small business sector and our wider economy – particularly given that small firms make up over 90% of New Zealand businesses and employ nearly a third of our workforce.
“Agriculture is understandably less upbeat in the face of current challenges in the dairy industry. But it’s encouraging to see strength in other sectors and signs that firms are benefiting from being part of a more diversified economy.”
Highlights from the March 2016 ANZ Business Micro Scope survey of small firms:
- Small firms’ confidence in the business environment fell to +1%. It was +14% in December and -23% in September.
- Our composite measure (a key growth indicator taking in own activity, employment, investment and profit expectations) held respectable ground at +10%.
- Wellington (+16%) is the most upbeat region, followed by Auckland (+15%) and the South Island outside Canterbury (+14%). Canterbury slipped 2 points to +1%.
- The manufacturing sector (up 7 points to +18%) led the way. Construction (up 2 to +12%) and retail (up 5 to +12%) also rose. Services eased 2 points to +17%, while dairy concerns saw agriculture post a fourth consecutive fall, to -17%.
- Low turnover, regulation, lack of skilled staff and competition were ranked as the big four challenges facing small business owners in the year ahead. These have regularly been rated the top four challenges in recent years.
Note: Net percentages reflect the balance of sentiment, i.e. percent positive minus percent negative responses