Signs of Recession on the Horizon, Business Survey Shows
A net negative of almost 80% of businesses (a historic low) expect the New Zealand economy to be performing worse in 12 months’ time than at present, the latest Central New Zealand Business Confidence Survey has found. A similar proportion have reported having to raise prices in the last 12 months, with 75% of organisations expecting this trend to continue over the next 12 months. The survey of over 200 businesses in the Central New Zealand region was conducted at the end 2023 Q1.
In the past year, almost 90% of businesses surveyed have experienced heightened pressure on wages, with a significant proportion reporting difficulties in finding sufficient staff with suitable skills and experience. In the same period, over 70% of firms have reported challenges in retaining staff.
The survey found wage inflation to be a major concern for employers, with multiple businesses reporting heightened wage expectations and voicing concerns around the long-term affordability of this trend. Workforce availability and affordability were the single biggest concern of business for the 12 months ahead.
While the majority of organisations surveyed reported no negative impacts as a result of recent Cyclone Gabrielle, a quarter of businesses cited concerns. Notably, 18% of respondents cited negative impacts, despite being based outside of the Hawke’s Bay region. Several respondents cited uncertainty around future climate and weather events as a key concern for their business.
“Levels of demand appear to have cooled significantly and businesses are behaving as if a recession is on the horizon, with spending and investment decisions put on hold, even if this is yet to be technically confirmed by the economists” said Simon Arcus, Chief Executive of Business Central and the Wellington Chamber of Commerce, who conducted the survey.
“Cost pressures remain high and businesses have had no choice but to pass these on to customers.
“There are also signs that inadequate infrastructure is dragging down productivity, with businesses concerned that both central and local governments are not addressing the practical challenges faced day-to-day by industry.
“In Wellington in particular, there is real frustration that successive councils have failed to make progress on long-promised upgrades and improvements.”
Respondents also cited concerns around the upcoming election and the continued uncertainty this presents for the prevailing policy landscape and the business environment in which they operate.