Business optimism takes leap on last year

Pam Newlove. Photo / Supplied

Survey says confidence of firms making best use of 'new normal' economic reality far higher than in Australia.

Business confidence has leaped 22 per cent on the same time last year, putting New Zealand's optimism well above that of Australia and even further above the world figure, a new survey shows.

Pam Newlove, a partner at Grant Thornton IBR, says the company's survey shows New Zealand sitting 10th on the world business optimism table, and business confidence lifting to 58 per cent, well ahead of Australia where confidence is up but only to 31 per cent.

"New Zealand business owners have accepted the tough grind we've been going through over the last couple of years is the new norm and they're just knuckling down and doing the business," Newlove said.

Businesses had learned to be smarter about how they operated rather than lament the recent difficult times. Successful firms identified their niche products or services and capitalised on opportunities to secure market share that way.

"Australia may not have suffered the level of pain we endured in the global financial crisis, but with the slowdown of China and the fall in commodity prices, indicators have turned south in the 'lucky country' with a slew of major redundancies in some of the larger companies.

"Employment aspirations show that 34 per cent of New Zealand companies are looking to employ more staff in 2013 compared with only 8 per cent in Australia."

New Zealand companies had almost twice the level of optimism being experienced in Australia on forecast revenues and profitability.

Thirty eight per cent of respondents were concerned about the lack of skilled labour, 31 per cent about red tape and 28 per cent about a shortage of working capital as constraints to growing and expanding businesses.

"Red tape is interesting; although it is noted as a constraint, it is less of a concern in this country compared with many others." New Zealand was often seen as an easier place to do business relative to other jurisdictions.

Newlove said the overall picture was one of an improving economy but some key messages had come out of the survey. "Businesses must look after and retain their good staff, continue to educate and upskill them and continue to invest energy and time into maintaining and managing customer relationships," she said.

"Around the world, hopes for a strong start to economic recovery in 2013 appeared to be falling as business confidence in mature economies continued to fall away caused by concerns over the United States' 'fiscal cliff' and continued fears over the long-term viability of the Eurozone dampening growth prospects.

"The survey shows that global business optimism stands at just net 4 per cent heading into 2013. This halted a rally in confidence seen in the first half of last year, when global business optimism reached 23 per cent and brings it nearer to the flat level observed this time last year."

The fall in global business optimism had been largely driven by a huge fall in the world's largest economy, the United States. Optimism amongst US business leaders had climbed to 50 per cent in the second quarter last year but slumped back to -4 per cent in the fourth quarter - the lowest since the depths of the financial crisis.

Ed Nusbaum, CEO of Grant Thornton International, said protracted negotiations over how to resolve both the sovereign debt crisis in the Eurozone and the fiscal cliff in the United States had weighed heavily on business confidence over the past six months.

"With the economic outlook clouded by these issues, business investment becomes a much riskier proposition for many."

The IBR survey was of 3200 businesses from all industry sectors across the globe, conducted in November/December last year.