By BRIAN FALLOW
Small businesses outperformed the rest of the economy in the first half of the year, the National Bank says.
It has calculated a "small business GDP", reflecting the activity of firms with fewer than 20 employees.
It struggled more than the overall economy in 2000 and last year as
consumer spending slowed and construction activity shrank.
But it has grown 3.7 per cent in the first half of this year, outstripping the overall GDP growth of 2.7 per cent.
"A buoyant construction and residential real estate market has been a key factor in the resurgence in small business activity," said National Bank chief economist Dr John McDermott.
That is not just the 7 per cent of the small business sector directly involved in building.
Construction activity affects other tradespeople, retailers, real estate agents and lawyers - all in sectors with a high proportion of small firms.
Small and medium enterprises among the respondents to the National Bank's business confidence survey continued to cite red tape as their biggest problem, and unskilled employees next.
Taxes ranked fifth among their concerns, and interest rates ninth.
But while businesses report that finding good employees remains a major problem, those with fewer than 20 workers are more cautious about increasing staff numbers.
"Firms have reduced their search for employees in part because they are becoming more circumspect over future prospects, and because of their growing frustration over not being able to find adequately skilled staff," McDermott said.
"Long term, the economy needs more apprentices, more investment in training.
"But it's a big commitment [for employers] especially when they are not at all sure about world conditions 12 months out."
They would rather hire someone who would be fully productive from the start, but such people are hard to find.
