Minister of Finance Grant Robertson is “unsurprised” by yet another fall in business confidence but says firms should be paying attention to the “real economy.”
But the Opposition is slamming the Government, saying its economic management “is in disarray.”
Figures from ANZ show half of all businesses surveyed are expecting general business conditions to deteriorate in the year ahead, up five points from last month’s study.
Firms’ perceptions of their own prospects, which ANZ says is a “much better gauge of actual economic outcomes, is unchanged at 4% expecting an improvement.
But this is well below the long-term average of 27%.
The kiwi dollar fell almost half a cent against the greenback following the data being released.
Finance Minister Grant Robertson says he remains “unsurprised by these results” but repeats that data emerging from the “real economy continues to show that things are in good shape.”
He points to a strong surplus, low unemployment, GDP growth forecast to average at roughly 3% and strong company earnings.
But National Leader Simon Bridges says the results of the survey are concerning.
“Confidence worsened in all sectors apart from construction, which is still at negative 50 points. And ANZ says the issues in the construction sector are starting to cause stress in other industries.
“These surveys show more than just sentiment. The intentions of businesses have real impacts on New Zealanders."
ANZ Chief Economist Sharon Zollner says the economy is delicately placed.
“But it seems increasingly inevitable that wariness amongst firms will have real impacts, in the near term at least, as investment and employment decisions are deferred.”
Investment intentions a concern
She says investment intentions from the survey provide a very good, although not perfect, directional signal for GDP growth.
“In August, a net 5% of firms reported they intend to reduce investment (down 6 points). If this weakness is sustained, it will not bode well for GDP growth heading into the end of the year.”
This is the lowest level the survey has recorded for investment intentions since 2009.
Although there are still a number of economic headwinds for the country, firms have real concerns about industrial relations policy, minimum wage hikes and costs more generally – and particularly about their ability to pass on higher costs and maintain profitability.
Robertson reiterated the message from Westpac chair David McLean that business should not talk itself into a slump.
McLean made the comments before Prime Minister Jacinda Ardern spoke to business people on Monday where she attempted to soothe concerns over falling confidence levels.
Robertson says: “We have an active programme of engagement with business that’s about relationships. This was enhanced this week by the formation of the PM’s Business Advisory Council, to be chaired by Air New Zealand CEO Christopher Luxon.”
ANZ’s survey did not capture the Prime Minister’s speech on Monday.
49 Comments
First, the Government is not a business, nor should it be run like one.
Second, The government don't need to be experts. They are representatives, whose job is to surround themselves with experts and listen to their counsel.
Third, The "Experts" need to be impartial, apolitical, and not lobbiests serving a specific company.
Fourth, The only business experts are those that started their company and grew it from the ground up successfully. Most CEOs are nothing more than hacks with the right connections.
Sometimes it is vitally important to weed out the rubbish that National so obviously allowed to flourish. Take a look at Iceland. Iceland quadruples fish value. https://www.youtube.com/watch?v=fOp2LbNvtBk
I think I posted this a while back on another thread. They've already been here and told their story.
http://www.stuff.co.nz/business/industries/9167703/NZ-can-learn-from-Ic…
It's no surprise that some in the business sector (or some who like to be associated with it) would flounce around more with a Labour leader who's not a mate in charge, vs. a matey-tatey investment banker.
That said, lalaland made a sound comment on one of the recent threads on business confidence:
It’s not because of the election result.
It’s because of a credit slowdown.
Nobody gives a shit about the government
Burger King - Banned from hiring immigrants due to wage theft
The Warehouse - 20 Complaints about one manager who retains his job
Swamp House $520 (per week) - Still being rented out
Failing Building Companies - Result of mismanagement
Steel and Tube - Large loss due to mismanagement
Vector - Shareholders concerned
Kiwi Bank - Information Technology disaster (though has doubled profit)
Sky TV - Headed down
etc, etc, etc
Sorry to hear about the lack of confidence guys, but we can't import any more slaves for you because there is nowhere to house them - hold up, who cares, we'll import 70,000 more! Clearly all the COL's fault - National are heaven sent.
Businesses crying over policy changes is strikingly similar to an addict going through stages of substance withdrawal.
Bring the National Party back into power, they provided shady businessmen with a steady flow of unskilled migrants to abuse without much of a legal consequence.
How dare Labour-Green ask businesses in NZ to act as one should in developed countries. Innovate? Invest in technology and intellectual capital? Haha, no way!
Totally agree Advisor, businesses have a divine right to exploit migrants. If their CEOs and managers run their businesses into the ground and commit fraud - aforementioned CEOs and managers still deserve their bonuses and assets to be protected in trusts.
The upper classes have a divine right to rule in NZ - if these 'unskilled' migrants dare to eat a chip while working at Burger King - CALL THE POLICE - Charge them IMMEDIATELY with THEFT~!!!
Immigration NZ has made these migrant workers bound to their employers - they are their slaves and therefore should follow instructions to the letter .. if they complain, they'll be deported and a new slave sent to replace them~!! It's the New Zealand way.
Running a business is so easy! Those silly business owners are all so evil and lazy and exploitative of the proletariat when all they need to do is wave the magic wand and mouth some empty buzzwords just like my favourite politician and everything will be great! Let's do this!
I can assure you a crackdown on low-skilled migration or raising minimum wages will not affect the productive players in NZ economy such as the ones that feature on the top 200 or Fast 50 list.
Businesses where profitability is largely affected by such changes shouldn't exist in the first world (I hope we can still call ourselves that after 9 years under the National Party). Their profits are being subsidized by taxpayers who are picking up the tab for the infrastructure deficit.
And since you are a fan of buzzwords, here's one from Kevin O'Leary for all the sweatshop owners around the country: "the noble thing to do would be to take your business behind the barn and shoot it!"
Foyle. Hang on a mo. She reminded the AKL business crowd yesterday that she was the biggest employer. So clearly she knows what it's like to wake up in a cold sweat and toss and turn for hours with worry over your business. She walks in our shoes, feels our pain. Shares our struggles.
There seems to be a sentiment that this is all down to perception and that Labour is anti business and therefore will never earn confidence from that sector. Then again National was certainly pro business and a fat lot of good that did for the man on the street so to speak. Just need to think about for example, what Fonterra and Fletchers have squandered while hoovering up all that sponsorship from government circles. Labour though had nine years to think about policy that would be both effective and palatable to businesses in general.
Instead they seem to have no better ideology other than to make it up as they go. The hasty tax back down pre election was one example. The knee jerk collapse of energy exploration another. If Labour are “unpopular” & lack “acceptance” from the business community, they need to take a long hard look in the mirror.
Sorry Foxglove, but there are bigger games afoot. I'm not sure the Govt see ahead clearly, and maybe that depends on the intellect of the individual, but I'll give you the tip - I've never heard a National Pollie mentioning the Circular Economy.
So the Nats are behind
There are only 500 companies in NZ that generate more than 80 million turnover, so focus on the challenges of SMEs is where it is at and the non profit sector, the rest have enough lobby power already. Problem is those with no clue on business listen to the corporates only, case regardless of party. The SMEs are the ones open to competition and can't necessarily increase their prices to offset the cost increases. Let them close I often see mentioned here..well think long and hard what would be left if that did happen...
I wonder how many smaller companies are struggling due to the corporate style big box stores taking more and more of the market share due to price point and location?
E.g. Mitre 10 Mega with 80 stores across NZ will get a much better buying rate + rebates. That must surely have a big impact on the smaller hardware stores bottom line as they too need to compete. Instead of having the choice of shopping at (or working for) 10 different hardware stores in Auckland, you effectively have the choice of going to 1 hardware store in 10 locations all with the same prices and the same suppressed pay rates. As the population and market grows, *boop* up goes another box.
Return the residential and commercial property markets to something that can be sustained by NZs economy vs something that is currently squashing it flat. We need a reset. The business market knows it. Everyone clearly remembers the GFC, and have the run sheet on how to handle it.
Cheap overseas labour and cash has tricked many into thinking that their extortionist building costs (rates, rent, construction) are all normal. They are not.... and they are crippling NZ's support services (schools, hospitals, roads, general infrastructure) and driving our born and raised youth to Australia. National merely masked this issue with mass immigration from India and China and promoting flogging the kitchen sink to the largest overseas wallet, removing it from local supply or forcing Kiwis to become permanent rent slaves.
The majority voted for not more of National. Stay the course and get on with it. For the stupidly in debt ponzi farmers, time to stock up on pepto. Your friendly bank will have your back...truly it will.
Housing consents up bigly - yup definitely a sign of a downturn.
Government investment in infrastructure up - yup definitely a sign of a downturn.
Exchange rate coming down - definitely a sign of a downturn, not going to help exporters at all.
Significant pay rises in the public sector and its contractors - yup definitely a sign of a downturn.
Business needs to wake up. Domestically, it is a positive environment. The only clouds are international.
Another term for confidence is trust and trust is what the COL does not have from the business community. Perhaps they are being abit naughty not embracing the new Government or they really don't like the polices but whatever the reason business will win for it is them whom make the decisions that effect our economic future. I think the lack of maturity in Government decisions like the oil and gas ban has created the feeling of insecurity in boardrooms around the country - no trust. If this decline continues on its current path the COL will cop the responsibilty and be voted out in the next election.
Well your business reflects the entire economy does it?..go figure..there are many sectors of the NZ economy in contraction and reflecting a real economic change, in particular if government policy is not sorted by 1 October for one sector in particular, major players will fall over..that will be October's news if policy not corrected in time....
This opinion piece resonates and should be considered worthy of a read.
https://www.newshub.co.nz/home/politics/2018/08/mitch-harris-aussie-ban…
JA and GR have a credibility problem (with business). No amount of jawboning will change that sentiment, that is unless economic stats come out showing things are on the improve. At the moment gdp growth has stalled. Unless there is an up kick, she will remain a liability to NZ economic prosperity
Whether it’s reasonable or not doesn’t come into it. If you claim credit for an upside that wasn’t your doing you are vulnerable on the downside. All governments claim power over economic performance as it justifies their existence. Taxinda and the COL were given power by Winstone at what I suspect will be the worst possible timing. They accepted it and will have to make the best of it. This week has been horrific for them and I suspect it’s just starting to snowball.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.