Wellington business confidence slumps to pre-Christmas levels

Wellington business confidence slumps to pre-Christmas levels

Confidence “significantly lower” than at the same time last year

Confidence among businesses in Wellington has retreated to pre-Christmas levels, with concern raising in relation to growth initiatives from the government.

That’s according to Wellington Chamber of Commerce Business Confidence findings, highlighting that confidence in the local and national economy, businesses’ own situations, and earnings forecasts have all fallen since the previous survey, in March.

Confidence is also “significantly lower” than at the same time last year, while confidence in the national economy is negative for only the second time since 2009.

The survey shows that a net 18 per cent of respondents expect the Wellington economy to improve over the next 12 months - compared to the net positive 21 per cent in March.

In June last year, a net 55 per cent responded positively to the same question.

"A lot of this has to do with changes to workplace legislation as contained in the Employment Relations Amendment Bill,” explained John Milford, CEO of Chamber of Commerce.

“Such as the proposal to remove 90-day trial periods from companies with more than 20 employees, allow union reps to enter a workplace without permission, force businesses to settle collective agreements, and force them to join a multi-employer collective agreement.

“Businesses are telling us that these proposals will further reduce their flexibility and harm their growth prospects.”

Meanwhile, Wellington business confidence in the national economy has fallen to a net negative response after returning to net positive in the March quarter.

A net negative four per cent now expect improvement, down from a net positive seven per cent per cent.

According to findings, this is only the second time net sentiment in the economy has been negative since January 2009 - the previous time was in December last year.

Delving deeper, businesses’ confidence in their own situation continues to drop, with a net positive 44 per cent expecting an improvement over the next 12 months, compared to 46 per cent in March - in June last year it was 63 per cent.

Furthermore, a net 41 per cent of respondents expect their earnings to improve over the next 12 months, compared to 44 per cent in March.

In June last year this was a net positive 61 per cent and of all respondents, 56 per cent expect earnings to improve, while 14 per cent expect them to decline.

“It also has to do with increases in the minimum wage policy and managing increases in wages and wage expectations,” Milford added. “Even the increase in the number of strikes is having an effect.

“Though they don’t involve business directly, they’re adding to the general climate of uncertainty that business is facing right now.

“If they’re telling us they’re not confident to invest - be it in new skills or new plant and machinery - it’s because they’re not happy with what they’re seeing.”

Finding skilled staff continues to be a challenge for most businesses, with just four per cent saying it’s easier to find skilled staff now than it was 12 months ago, which is consistent with the previous two surveys.

In addition, some 47 per cent say it’s harder to find skilled staff, up from 41 per cent of respondents in March.

“Business perceptions are driven by market conditions, and by local and national government actions, and that’s why confidence is low,” Milford said. "If the Government is worried about business confidence it should put a halt to these changes."

When asked unprompted what barriers are holding back their business, the no.1 issue was an inability to access or attract skilled staff (21 per cent), which is again consistent with the Chamber’s surveys over the past year.

When asked unprompted what barriers or issues they believe are holding back the Wellington economy, the most commonly cited issue was infrastructure, including roads, airport runway, rail system, and internet connection speed (31 per cent of respondents).

This was followed by local and central government leadership, direction, and policy (19 per cent and 13 per cent respectively).

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