NZ well ahead in transtasman confidence stakes

Strong competition between the Tasman neighbours on the netball court is echoed in economic performance but Australian confidence has taken a hammering. Photo / Natalie Slade

New Zealand is outperforming Australia in terms of business confidence, but is lagging behind other countries including Singapore, Denmark and India, a survey says.

The latest International Business Report from accountancy firm Grant Thornton found New Zealand was sitting comfortably within the upper half of the 39 countries surveyed. Its confidence level was 52 per cent in the second quarter of this year.

New Zealand came in just ahead of France (49 per cent), the survey said.

Confidence levels across the Tasman were just 26 per cent - only 4 percentage points ahead of Ireland, which found itself mired in a sovereign debt crisis this year.

Peter Sherwin, a partner in Grant Thornton's Wellington office, said Australia had experienced a 44 per cent decline in confidence between 2010 and 2011 - the most drastic fall of any of the countries surveyed.

It was fresh evidence that the strong aussie dollar, a recently introduced flood tax and declining housing market were causing concern, he said.

"A recent Australian survey indicated that 40 per cent of Australians believed they were worse off than a year ago and were borrowing to sustain their standard of living."

BNZ economist Craig Ebert said there were even signs that Australia's mineral export sector was reaching its peak.

But in New Zealand there was an undercurrent of strong recovery, despite the Christchurch earthquakes, he said.

The Grant Thornton report follows the Institute of Economic Research's June survey, released this week, which found a net 27 per cent of respondents expected the general business situation to improve over the next six months.

"You've got all things starting to look better," said Ebert.

Sherwin said a net 12 per cent more New Zealand businesses were looking to invest in plant and equipment than a year ago, compared with -7 per cent across the Tasman.

"When this is matched with the fact the employment intentions of New Zealand companies are increasing, whereas Australia's are declining, then a growth pattern is starting to emerge," he said. "A comparison between the first and second quarters shows a 27 per cent increase in the number of New Zealand companies looking to employ staff compared with a 9 per cent decrease in Australia."

The survey also suggests that the wage gap may be closing between the two countries, with 78 per cent of New Zealand businesses planning to increase wages in the next 12 months, up from 55 per cent a year ago, compared with 69 per cent in Australia.

However, 44 per cent of New Zealand firms reported concern about a tightening labour market and lack of skilled workers, a nine percentage point increase on the previous quarter.

In Australia, the number of companies concerned about those issues was declining, according to the report.

Indian businesses reported the highest levels of confidence in the Grant Thornton survey - at 88 per cent - while Japanese firms reported the lowest levels, at -62 per cent.

According to the report, global business optimism has taken a heavy hit over the past three months.

"Companies are feeling the effects of the unrest in the Middle East and the subsequent volatility in oil and commodity prices, which recently led Western nations to release large stocks of oil," the report said.

"In addition, the earthquake and nuclear disaster in Japan caused huge disruption to supply chains."

The survey was based on interviews with 2697 businesses around the world in May and June.

FUTURE'S BRIGHT

Levels of confidence:

* India: 88pc
* Singapore: 64pc
* Denmark: 62pc
* New Zealand: 52pc
* France: 49pc
* China: 43pc
* US: 41pc
* Australia: 26pc
* Ireland: 22pc
* UK: -1pc
* Japan: -62pc

Source: Grant Thornton International Business Report