(see northland results below..)
The ongoing difficulty provincial businesses are having recruiting skilled staff coupled with a massive increase in expectations of higher interest rates is threatening to put a brake on the rural economy.
For the first time in more than a year the level of overall optimism in provincial centre businesses has slipped in how they assess their own prospects in the period ahead even though optimism about the overall economy is marginally up compared with a similar survey three months ago.
Key findings of how respondents see their own business situation over the next six months indicates that 61% in the latest quarterly survey predict they will improve compared with 65% of this view last December.
In terms of the general situation 36% of respondents in the quarterly survey conducted last week expect the general situation to improve in the period ahead compared to 33% of this view last December.
However, the findings break with the trend over the past 18 months for the provincial survey and a parallel urban Auckland survey to show similar results and trends.
In the urban Auckland survey conducted at the same time as the provincial survey optimism generally and in individual businesses has continued to increase but unlike provincial areas the Auckland survey records a big jump in the number of businesses having difficulty recruiting suitable staff.
In urban Auckland 27% of Auckland businesses believe the general business situation will improve during the next six months of next year compared to 23% of this view last December. Similarly, in respect of how individual Auckland businesses see their own business prospects over the next six months, 55% predict they will improve which is a 2% increase on the 53% of this view last December.
The stand out feature of the Auckland urban survey is that the overall level of difficulty businesses are having finding skilled staff has jumped to 46% from 38% in a similar survey just three months ago. In contrast, provincial businesses report that the difficulty of finding skilled staff has eased, with 40% of this view in the latest survey compared to 44% last December.
Similarly, the Auckland survey indicates just 6% of business are finding it easier to recruit skilled staff – consistent with the Auckland survey for the past 18 months. In contrast, 11% of provincial businesses indicate that finding skilled staff is easier than three months ago, compared to just 4% of this view last December. However, comments about the difficulty of finding reliable staff continue to feature in the provincial survey feedback.
A stand out feature in both surveys is a massive jump in expectations of higher interest rates over the next 12 months:
· In the provincial survey, 82% of respondents expect interest rates to increase compared to 38% of this view last December.
· In the urban Auckland survey, 83% of respondents predict interest rates to increase over the next year, compared to 37% making this prediction last December.
Whilst continuing to be optimistic about the economy Northland Chamber of Commerce members say the signs are that increasing interest rates and skills shortages / gaps are beginning to affect the decisions that businesses make strategically and tactically.
This is unfortunate. While the strong self belief of many businesses continues to be reflected in the Chamber survey findings, if a business cannot recruit people with the right skill or attitude to learn a skill then the business has little prospect of being able to expand and grow. Without business growth, the economy and New Zealand’s prospects go nowhere.
The early signs of a down turn in confidence among individual businesses in provincial centres resulting from a combination of skill shortages and concern over higher interest rates is reinforced by the response to a question to identify what single factor is most limiting their ability to expand:
· At 34% compared to 27% last December demand is now clearly ahead of other factors as the most limiting to a businesses expansion.
· Labour on 19%, finance on 18% and capacity on 14% are the next highest constraints cited by respondents.
In many previous Chamber surveys, finance and capacity have been rated the most limiting factor preventing a businesses from expanding. These are now clearly overtaken by labour constraints. Comments of individuals show that the difficulty of recruiting both skilled and unskilled staff is now a deeply embedded concern of many provincial businesses.
Predictably, concern over higher interest rates has emerged as a factor cited by a number of respondents as a reason for putting expansion plans on hold.
The early signs of a down turn in confidence emerging sends a message to Government suggesting it needs a focused strategy to overcome the persistent shortages of skills and unskilled staff in New Zealand from Taupo north if it wants to secure a progressive, growth-led economy.
The Northland Chamber of Commerce will be presenting a seminar in May on the removal of obstacles in importing skilled labour to Northland.
Every Quarter the Northern Chambers of Commerce undertake a business confidence survey. This is a combined effort between all the Chambers of Commerce from Taupo to Northland. Whilst Northland still comparatively has a good level of business confidence benchmarked against Auckland the signs are that increasing interest rates and skills shortages / gaps are beginning to affect the decisions that businesses make strategically and tactically.
The Northland Chamber of Commerce is the networking, education, advocacy and marketing group for Northland business, and is part of a nationwide network of 30 and a world-wide movement of 21,000 chambers. Subscription to the free fortnightly chamber e-news can be arranged on info@northchamber.co.nz. Enquiries to 09-4384771 or www.northchamber.co.nz, www.kaiparachamber.co.nz and www.farnorthchamber.co.nz
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