Business confidence plummets to decade-low

Auckland Chamber of Commerce chief executive Michael Barnett Photo / Paul Estcourt

Business confidence has plummeted to its lowest level in more than a decade and indications are there could be worse to come, according a survey of North Island businesses.

The latest Auckland Chamber of Commerce survey of 1000 Auckland businesses shows just 18 per cent in the region expect business conditions to improve in the next six months and outside of Auckland, in drought stricken Northland, sentiment is even weaker.

It is the second quarter that confidence has fallen to a level lower than it has been in more than a decade and represents a considerable drop from June results which saw confidence at 35 per cent.

The latest survey included responses from 1000 Auckland businesses and 700 businesses outside the region.

Chamber chief executive Michael Barnett said the traditional spring surge in optimism had failed to materialise, and 2011 would spell the end for some businesses who were only now "hanging on by the skin of their teeth".

"A large number of businesses are doing profitless business. They are just doing business to stay alive. Everybody was expecting over the 2009 period that was going to be the worst of it, but the market hasn't picked up and consumers are keeping their hands in their pockets."

Even next year's Rugby World Cup wouldn't be enough for some, he said.

While businesses expected to benefit from the 80,000 credit cards the Rugby World Cup would bring to New Zealand, they also realised that much of the infrastructure spend had already been made.

"We have a major event happening but it's only a blip. There is little on the horizon domestically following the cup and so then you're back to being dependent on the world economy lifting so that we can export more," he said.

New Zealand was at the mercy of a better performing world economy, Barnett said.

The survey also showed that some businesses were finding it increasingly difficult to find skilled staff.

In the Auckland region 18 per cent of businesses said they had found it hard to find the right people with the right skills - up from eight per cent in January.

The figure was 23 per cent in the zone from Taupo to Northland, excluding Auckland, Barnett said.

Businesses also reported difficulty obtaining bank finance and said this, along with demand, was one of the most limiting factors to expansion.