Hawke's Bay businesses showed an upswing in business confidence according to the latest New Zealand Institute of Economic Research (NZEIR) Quarterly Survey of Business Opinion.
In the second quarter of 2011, 24 per cent of Hawke's Bay respondents said they had an improved business situation, reversing the 26 per cent decline
in the previous quarter.
Napier economic consultant Sean Bevin said the swing was a good sign but the next quarter's results would confirm if a corner had been turned for the local economy.
Mr Bevin said the 26 per cent increase in proposed investment for the next quarter in plant in machinery was heartening but that profitability, consistently falling since 2008, was a concern.
Hawke's Bay Chamber of Commerce CEO Murray Douglas said concerns about expanding sales were a recurring feature in the survey and businesses overall were still concerned about profitability, which continued to fall back. Profitability was anticipated to fall in the next quarter by 29 per cent of respondents.
"Hawke's Bay business needs to address some structural problems which these surveys show have existed for a very long time" Mr Douglas said.
"Average business costs increased significantly overall during the last quarter, a situation that has prevailed in the region since early 1999 and the situation is expected to continue over the next three months. A similar trend applies for average selling prices. Further there is again a worrying difficulty in recruiting for skilled labour needs, this is likely to increase as the economy rebounds."
"Labour supply and demand especially skilled labour is a matter likely to be addressed by the chamber through the Business Hawke's Bay agency along with simply growing and deepening the Hawke's Bay economic base to ensure we have more consistent trading," he said.
Both Mr Bevin and Mr Douglas said the NZEIR survey was a good indicator of business health. It has been held since 1987 and regularly changes those surveyed.
