Business confidence heading downwards

Decreasing business confidence should be making Grant Robertson and the Government a bit uneasy.

Stuff: Latest plunge in confidence sends ‘strong warning signals’ and talk of interest rate cut

A sharp fall in business confidence in June has ignited debate that the Reserve Bank may look to cut the official cash rate to a fresh record low.

On Thursday the central bank will review the cash rate and is widely expected to leave the OCR unchanged at 1.75 per cent, where it has been since November 2016.

That should at least keep mortgage rates down.

Asked about their general outlook for the entire economy, a net 39 per cent said they expected conditions to deteriorate in the coming year, a fall of 12 points on May.

Survey participants were more upbeat about the likely activity in their own business, with a net 9 per cent optimistic, but this was a 5 point fall from May and remains well below the long term average.

Significant drops…

While the monthly figures fluctuate, business confidence has been falling since June 2017, ANZ senior economist Liz Kendall said.

…and part of a longer downward trend.

Toplis said the ANZ survey, coupled with other indicators, represented “very strong warning signals”, including concerns about regulatory changes and a sharp drop in hiring intentions..

“It doesn’t matter whether uncertainty about a new government is justified or not, what we do know is that uncertainty causes deferred investment and that means lower actual and potential economic growth,” Toplis said.

“If employment growth slumps, as intimated by this survey, then economic activity will be adversely affected too.”

So the Government will have to play things carefully – with pressure of public service secots going on strike for substantially more pay.

The survey said that finding skilled staff was the most common problem seen by businesses, followed by regulation. Raised as a problem by 17 per cent of businesses, it was the highest reading for this problem since this data started being collected in March 2012, ANZ said.

Regulation is often claimed to be a major factor in the housing shortages, but it is also an ongoing issue with employers.

Meanwhile: Step forward for Bill giving 10 days’ leave to domestic violence victims

A Bill that would give victims of domestic violence 10 days of paid leave has taken a step forward.

It will now only need to pass its third reading, likely at some point in July.

It’s passed with support from the Government parties, and objection from National and ACT. If it passes, the law will come into effect from April 1, 2018.

The Opposition say the Bill is bureaucratically-heavy and expensive for employers. Mark Mitchell proposed a change to the Bill that would replace domestic violence leave with a clause making it explicit domestic violence is a legitimate reason to take annual or sick leave instead.

So more regulation and administration.

And it also means that victims of domestic abuse will need to justify leave on that basis to their employer.

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42 Comments

  1. Blazer

     /  June 28, 2018

    we should all worship our businessmen,they are so altruistic,so clever,we’re lucky we…have such a remarkable bunch.
    Of course if they get too good,they sell out to overseas interests and add to our biggest export….profits.

    • Alan Wilkinson

       /  June 28, 2018

      As usual you value rhetoric ahead of sense. The sale price is the imputed value of those future profits and returns to NZ. Neither would have existed without the entrepreneur, nor would the jobs they created. Of course you will reply with some daft squirrel as always.

      • Blazer

         /  June 28, 2018

        talking gibberish again Al.
        Drury flocked on about the wonderful little Kiwi Xero ,taking on the world…then as it scaled up,dumped it from the NZX.
        Tell me about the billions in profits the big 4 banks make…and how wonderful that is for…NZ. NFI.

        • Alan Wilkinson

           /  June 28, 2018

          No doubt you prefer the taxpayer to throw ever more money into Kiwibank. NZers are equally as able to invest in our banks as Australians and reap their share of profits. So your usual complete b.s.

        • High Flying Duck

           /  June 29, 2018

          Xero – the company with over 2000 employees, mostly in NZ, which is still run from NZ and has a high number of NZ shareholders still?
          And the 4 main banks who provide long term stable funding to allow NZ businesses to grow?
          Yes, both examples of NZ getting dicked over…

          • Blazer

             /  June 29, 2018

            ‘And the 4 main banks who provide long term stable funding to allow NZ businesses to grow?’

            where do they get the funds from to do this?

  2. PartisanZ

     /  June 28, 2018

    “Regulation is often claimed to be a major factor in the housing shortages, but it is also an ongoing issue with employers.”

    That’s Right … What we need is unregulated employment …

    Never thought I’d say it but I actually agree with Mark Mitchell … I don’t think domestic violence should be a special category of leave …

    • Gezza

       /  June 28, 2018

      Last sentence. Why not?

      • PartisanZ

         /  June 28, 2018

        I totally concede that I might be missing something here …

        But surely sick leave is for sickness or injury … ?

        Surely domestic violence injury is ‘injury’ and is covered by ACC, possibly including counselling for long-term effects like PTSD …?

        And surely we want perpetrators brought before the Law? Could this special domestic violence leave affect reporting rates and the likelihood of charges being laid? (Maybe it would improve them?)

        Then, of course, presumably there’s individual arrangements employers are permitted to make with employees who suffer domestic violence?

        To exaggerate absurdly for effect: If, let’s say, the most common form of injury is falls … or driving injuries … or alcohol related falls & driving injuries … why aren’t we asking for special leave for these?

        Could it be because they’re covered by sick leave and/or ACC?

        • Gezza

           /  June 28, 2018

          The article isn’t very informative. My understanding was this Bill was to cover not the recovery from injuries but all the time needed to prevent it by eg victims moving out of the house to a refuge or having to change location to get away from a stalking abuser & taking all the necessary steps to organise things like protection orders, counselling, prosecution of the offender etc.

          • High Flying Duck

             /  June 29, 2018

            While the National comment about the bill hurting small businesses may sound callous, many businesses would have great difficulty with an unexpected 10 day absence. It is great theory, but could cause problems.
            That said, in an ideal world the leave would never be needed.

  3. Zedd

     /  June 28, 2018

    maybe if ‘Team Bridges’ spent less time ‘talking down’ the economy.. for their political gain, then things maybe different ?

    This Govt. are trying to move the country in the direction, where all kiwis get a fair go, not just the smug/selfish ‘Fat cats’/Tory cronies. 😦

    • Corky

       /  June 28, 2018

      Lol… the government doesn’t have a clue what its doing. I don’t think they expected to be the government. They are floundering, the perfect storm is brewing. I notice the media is gaining a ‘hard edge’ when the government and economics are mentioned in the same breath.

      You need to rid yourself of the concept of ”fairness.” Life isn’t fair. Yes, we should be all equal before the law…but we aren’t. Maori are special.

      If someone has gained wealth honestly and they don’t want to give a cent to someone starving in the street, I say good on them. If they want to spend money on the needy, good on them, again.

      You are right about Team Bridges. I’m tired of his whining. STFU, and give us policy. Once you have done that…please feel free to whine.

      • Zedd

         /  June 28, 2018

        Total Claptrap Corky..

        Life may not be fair.. BUT we dont need a Govt. whose sole purpose (politically) it to tip it further & further, in favour of those at ‘the top end’ 😦 😦

      • Gezza

         /  June 28, 2018

        Damn. Bloody hard choice for the most appropriate tick on that one.

        • Zedd

           /  June 28, 2018

          Im expecting the usual downtickers.. hitting soon ! 😀

          • Gezza

             /  June 28, 2018

            Corks is a bit of a challenge when he gets some things spot on. 😐

    • PDB

       /  June 28, 2018

      Zedd: “This Govt. are trying to move the country in the direction, where all kiwis get a fair go”

      You mean the govt back-flipping and trying to fast track 30,000 foreign workers?

      • Gezza

         /  June 28, 2018

        No, that’s a necessity to try and achieve their objective of building the number of affordable houses they’ve promised to give young couples a fair go at buying their own houses.

        The back flipping on policy is just a reflection on their incompetence in Opposition in making promises that were grounded in total unreality. But then it was Andrew Little who was always ending up in interviews on that subject looking like a possum in headlights who even then everyone could see had no idea what he was talking about & no clue how he was going to cut immigration which is how they’ve ended up again basically extending National’s immigration policy.

        Where they may have some scope to improve on National’s poor performance is in domestic skills training, but they need to really start running on that one as they aren’t going to have much to show for it by 2020 if they don’t have anyone but foreign construction workers building houses.

        • PDB

           /  June 28, 2018

          Is that the basic free standing affordable homes in Auckland they are providing for a bargain price….$600,000? The whole thing is a farce from start to finish including Winston recently saying he hopes houses can come back down to the $200,000’s.

          • Gezza

             /  June 28, 2018

            No I’m sure they were going to be cheaper than that, but now they’re dealing with reality they have had to make excuses & up the price significantly.

    • Conspiratoor

       /  June 28, 2018

      Or lazy (insert unflattering epithet here) who sit around on their arse all day sucking at the taxpayer’s tits

      Should THEY get a fair go?

  4. Patzcuaro

     /  June 28, 2018

    Fact Check.

    Businesses are pessimistic about the economy but optimistic about their own businesses, so is it a knee jerk reaction to a Labour lead government.

    When you compare general business to actual growth, under National businesses are over optimistic and under Labour they are over pessimistic (first graph).

    The second graph compares individual confidence in their own business to growth and this gives a closer match.

    So a good headline and some dodgy stats for National to attack Labour, better to look what businesses actually think about their own businesses.

    https://www.stuff.co.nz/business/103016504/fact-check-business-confidence-surveys-have-little-to-do-with-actual-economy

    • Alan Wilkinson

       /  June 28, 2018

      Obviously business confidence in the economy depends on public forecasts and pronouncements. Since Labour is usually promising to wreck the economy and National to rescue it and both over-promise it is hardly surprising that business expectations also over-shoot.

      In fact the GDP charts in your link show that Labour inherited a strong economy and made it worse while National inherited a poor economy and made it better. No surprises there.

      • Patzcuaro

         /  June 28, 2018

        Your view that Labour promises to wreck the economy is highly subjective, I doubt voters are silly enough to elect a government that promises to wreck the economy. I do agree that politicians have a tendency to over promise and under deliver.

        Looking along the graphs, apart form the period around the global financial crisis the economy under both Labour and National has performed well at about 3% annual growth. You appear to over promising and under delivering with your comments.

        • PDB

           /  June 28, 2018

          Business would have been shocked that a whole industry was thrown out after a quick meeting of 3 party leaders and no discussion with anybody else and ignoring advice that the action of doing so would not achieve the outcome they were after.

          Patz: “The second graph compares individual confidence in their own business to growth and this gives a closer match.”

          Major drop in that department too – from what I can tell under National it sat around 35-40% & now it sits at 9% & is heading down;

          Newsroom: “Companies are also typically more downbeat about the broader economy under a Labour administration, and ANZ stressed today that business sentiment “is only one input into the decision-making that drives the economy” and “firms’ expectations of their own activity are a better gauge of future GDP growth”.

          However, that latter measure was also today down, though it remained positive. A net 9 percent of firms predicted increased activity in their own business, down from 14 percent last month. Manufacturers were the most optimistic at net 16 percent positive, while retailers were most gloomy at net 6 percent.

          • Patzcuaro

             /  June 28, 2018

            Yes confidence in the economy and individual outlooks have fallen with the Labour led government. But the sky doesn’t fall with a change in government, life goes on. All you can take from the graphs is that the economy will out perform expectations under Labour and under perform with National.

        • Alan Wilkinson

           /  June 28, 2018

          Labour voters don’t give a damn if the economy gets wrecked so long as they get more handouts. Labour promises accordingly and business draws the correct conclusions.

      • Blazer

         /  June 29, 2018

        once again showing you have no idea.
        We are constantly told of the wonderous way NZ was guided through the biggest jolt to confidence..i.e the GFC.
        International events have the main bearing on business confidence.
        Corporate welfare is not dished out as freely by a Labour Admin,and business don’t like that at all.

        • “Corporate welfare is not dished out as freely by a Labour Admin”

          They leave that to NZ First?

          So you don’t think that Working for Families is a form of corporate ‘welfare’?

          • Blazer

             /  June 29, 2018

            if you think families are corporations….well…!!

  5. Zedd

     /  June 28, 2018

    I heard Dr Clark (on behalf of Robertson) rattling off stats about ‘Business confidence was down under the previous Labour Govt.. then up against the last Natl Govt’… BUT the actual stats (GDP growth) was opposite.. Labour under ‘aunty Helen’, had 9 straight years of surpluses.. Natl only managed ONE.. in 9 loooooong years, which they constantly blamed on GFC, ChCh Quakes etc. (but not their own FAILURES)

    This was followed by a ‘Supp Q’ from Mr Shaw who asked, ‘if these stats are correct, then is it likely that under this new Govt. (supposedly ‘Business confidence’ is again Down) it will also likely go the other way’ ?

    Mallard ruled it ‘out of order’

    BUT; it sounded like Business confidence is driven purely; by which party is in power (cronyism ++), not how well the economy maybe managed, under either ?!! :/

    • PDB

       /  June 28, 2018

      Business confidence could be affected by many things – foreign events for example, but one would have to have their head buried in sand if they thought this govt is being great for the business community and we haven’t even seen the worst thing (1970s style workplace reform) come in yet.

      The fact the govt is concerned about business confidence is spelled out in their major backflip on migrant workers which also sees their apprentice requirement for businesses hiring foreign workers turfed out as well.

    • Alan Wilkinson

       /  June 28, 2018

      Labour’s years of surplus resulted from its usual heavy taxing and consequently worse economy and low business confidence.

      History repeating.

      • Gezza

         /  June 29, 2018

        Were you impoverished by Labour when you were running your IT business?

        • Gerrit

           /  June 29, 2018

          It is not a question of impoverishment, it is a question of how confident under Labour a business owner will invest in the future with their capital.

          From that investment will come employment opportunities and increase cashflow to pay the higher taxes.

          As primarily an exporter, the falling dollar has been good for business, but do I have the confidence to expand (inject more capital) employ more people, pay more tax, etc. with Labour/NZFirst/Greens at the helm?

          That is what business confidence is about, not how much one would be impoverished.

          • Gezza

             /  June 29, 2018

            No I understand that. The question is to Alan. The way he rants on you would think a Labour government must have gone out its way to destroy his business & put him in the poorhouse, as it would do with any employer.

            As to business confidence it is perfectly understandable why it might drop when they end up with a government that in opposition made all sorts of pronouncements that could end up costing those at the margins their profitability & when those who would remain profitable but are currently ruthlessly deliberately exploiting their employees purely for enrichment in accordance with executive policy, by paying them as little as they can get away with, would want to rethink whether they would make more money investing somewhere else offshore where they could do that easier.

            Those are two different scenarios & yet both would be reflected in business confidence surveys.

          • Blazer

             /  June 29, 2018

            what real examples of business confidence under National can you show,that resulted in increased investment and jobs…..

        • Alan Wilkinson

           /  June 29, 2018

          Yes. The NZ IT business struggled to make profits through the Clarke years and shareholders carried it. Fortunately we sold the international business early in her reign so it wasn’t affected.

  6. High Flying Duck

     /  June 29, 2018

    “…Which was why, when a government minister recently said one of the biggest business confidence surveys going around was “junk”, I was puzzled.

    I assume he didn’t like its findings, which showed confidence continuing a subdued trend since the election. That means he also won’t like the Wellington Chamber’s quarterly survey or the others that do the rounds, because they’re all telling the same story.

    Business confidence surveys ask businesses about how they’re feeling and what they expect to happen to themselves and the national economy. They reflect what I’m being told face-to-face, and I doubt the minister would be willing to tell too many of these businesspeople to their face that what they’re saying is junk.

    Of course, confidence surveys are only one component, but they’re important because it’s people telling it like it is. Not to lecture, but we all know that in politics especially, perception is reality.

    The problem for the Government is that confidence is not going to improve as long as they insist on pushing ahead with their proposed changes to industrial legislation.

    But there are three other parts of the Employment Relations Amendment Bill as it’s drafted that will further reduce flexibility and harm the growth prospects of businesses.

    They are provisions that allow union reps to enter a workplace without permission, force businesses to settle collective agreements even if they don’t or can’t agree, and force them to join a multi-employer collective agreement (MECA).

    Employers and unions presently have good relationships, and I imagine most unions would still give notice of a wish to enter a workplace whatever the legislation says, so why the wish to return to the “us-vs-them” fortress mentality of the 1970s? Where’s the benefit?

    Similarly, rather than improving industrial relations, removing the right of employers to opt out of bargaining is likely to make it worse. Both parties can now opt out but removing only the employers’ right to do so is asking for trouble and bad agreements created under duress.”

    https://www.stuff.co.nz/business/105088829/minister-concerns-from-business-arent-junk

  1. Business confidence heading downwards — Your NZ – NZ Conservative Coalition