Press Release – Wellington Employers’ Chamber of Commerce
Confidence in the Wellington region’s economy has taken its second consecutive sharp upturn and has more than doubled in the past six months, according to the latest Wellington Employers’ Chamber of Commerce Business Confidence survey.
A net 40% of business respondents expect the Wellington economy to improve over the next 12 months, with 52.8% saying it will improve and 12.8% saying it will decline. This compares with a net 27.6% saying in August they expected the economy to improve, and 18.4% in May.
The survey of members, which was released today by Employers’ Chamber Chief Executive Raewyn Bleakley, was conducted in the last two weeks of November.
Confidence in the national economy is also very high, with a net 75.4% of businesses surveyed expecting it to improve over the next 12 months. This was a rise of 17.8% on the August survey and 28.7% since January.
A net 59.5% say they expect their own business situation to improve over the next 12 months, up 13.5% from the August survey. Some 67.2% expect an improvement and 25.1% no improvement. This is reflected in the findings that more businesses now expect to invest and take on new staff over the coming year than they were three months ago. Some 43% of businesses expect to increase their number of employees (both full-time and part-time), while 41% expect them to remain the same.
A net 27% expect to increase investment in plant or equipment over the next 12 months, with 39.4% expecting an increase, 12.4% expecting a decrease, and 48.2% expecting no change.
When asked to specify the limiting factors their businesses were facing, many businesses pointed to resources and staff shortages, reduced government funding, and the lack of demand for goods or services.
Some 38% say it is harder to find skilled staff than it was a year ago, with 53% saying that has not changed. When it comes to unskilled staff, 22% say it is easier and 73% says it is about the same.
When asked to list the main issues they believe are holding back the Wellington economy, the most popular reasons given were: Wellington City Council, infrastructure, and the city’s leadership. In regards to infrastructure, the airport was mentioned twice as many times as roading and transport.
Some 78.9% of businesses who completed the survey say they gave their staff a wage rise within the past 12 months. Of them, 25.7% say they gave an average rise of 1-2%, while 25.1% gave an average rise of 2-3%.
Raewyn Bleakley said it was clear from the survey that members felt things were at last on the move, both locally and nationally.
“This second consecutive sharp upturn is a good omen. The rise in confidence is now being cemented in, and that’s excellent news for the medium-term prospects for the local economy.
“Such confidence is usually followed by business starting to look at increasing investment in plant and staff, and this survey indicates that’s what’s starting to happen.
“When businesses talk about their own business situation improving, and that they will invest more money in plant and staff, then that is a very positive sign.
“It’s still too early to say that that is actually happening yet, but it’s looking very positive.
“Our survey mirrors that of the ANZ Business Outlook survey last week which shows 64% of businesses nationwide are optimistic about their prospects, and that Wellington business confidence is the highest in 20 years.
“I’m delighted, though not surprised, at how far confidence has come in such a short space of time, especially when you consider we had a couple of earthquakes in the middle of it all and there have been further cutbacks in the public sector.
“It just shows you how resilient Wellingtonians are, to shrug off those quakes and just get on with business.
“These are encouraging signs that the malaise that has hung over economic activity in the region in recent times is lifting.”
Raewyn Bleakley said the lift in confidence also mirrored recent rises in the Performance of Services Index (PSI) and the Performance of Manufacturing Index (PMI).
“These indexes are key indicators of performance, and both remain strong and rising.
“The region’s PSI is at 58.7, up by 6.1 points since October, while the PMI is at 64.6, rising 11.0 points from October, and is the highest level of activity in the central region since November 2002.”
The above graph shows the expectations of the national economy, Wellington economy and own business expectations over the next 12 months. The net value is calculated by the percentage of businesses expecting an improvement less the percentage expecting a decline in the economy. This chart highlights a huge increase in positivity amongst the business community in relation to the national and regional economy whilst a smaller increase in relation to their own business expectations.
(Source: Wellington Employers’ Chamber of Commerce quarterly survey of members’ expectations).