Survey: Highest level of business pessimism since 2021

Eighty percent of respondents in the Southland Business Chamber's May survey expect the general business situation in New Zealand to deteriorate in the next six months.

A Southland Business Chamber survey points to a significant drop in business confidence in the region.

The chamber’s latest quarterly survey of its members shows the highest level of pessimism since its first business confidence survey in August 2021.

Eighty percent of respondents in the May survey expect the general business situation in New Zealand to deteriorate in the next six months.

The remaining 20% of respondents consider the general business situation to remain the same.

The outlook on respondents’ own businesses - while slightly more confident than the general business situation in New Zealand - is split with 60% expecting things to stay the same in the next six months, while 40% are foreseeing a downturn for their own entity.

“These results are significantly different to 12 months ago when 62.5% of respondents were predicating an improvement in their business, and just 12% of respondents predicating a downturn,” the Chamber noted in the survey’s findings key points.

The survey showed businesses are continuing to struggle to find skilled/specialist staff with 60% finding it harder to find skilled/specialist staff than three months ago.

This trend continues for unskilled staff, with 40% finding it harder to find unskilled staff than three months ago.

“Not one single respondent has thought it is getting easier to find skilled or unskilled staff since commencing the Southland Business Confidence Survey’s in August 2021,” the summary noted.

This quarter 40% of respondents to the survey highlighted finding labour as the number one factor limiting growth.

Capacity, finance and supplies were identified by 20% of respondents as other factors holding them back.

There is no certainty on the future of interest rates with 40% of respondents expecting interest rates to go up, 40% consider them to remain the same, and 20% expecting them to go down in the in the next 12 months.

The level of uncertainty is high with 40% of respondents unsure if the level of investment in their business will change over the next 12 months, while 20% expect investment to be up.

“This compares to 12 months ago when 0% of respondents were unsure, and 57% of respondents expected the level of investment in their business to go up over the next twelve months.”

All businesses surveyed say they have experienced an increase in average costs and average selling prices.

Sixty percent of respondents have experienced reduced profitability, with 40% experiencing both lower sales in New Zealand this quarter.

Inflation and staff costs continue to have the greatest impact on profitability over the past six months with 80% of respondents.

Rising interest rates is closely behind with 60% of respondents.

Other areas of concern identified as affecting Southland businesses profitability included supply chain, energy, and fuel costs with 40% of respondents, and exchange rates with 20%.

Respondents believe all these major areas, with the exception of exchange rates, will continue to affect their business profitability in the coming six-month period.

“Burnout has been raised in previous reports as a major concern for business owners and it is positive to see 40% have reduced their hours worked this quarter and 40% are expecting to work less hours next quarter.”