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Low Business Confidence Despite Steady Economic Growth

22nd May 2023
North Canterbury business confidence has dropped markedly this year, despite positive figures coming out of the latest Waimakariri economic report. Both the North Canterbury Business Opinion Survey and the Quarterly Economic Monitor for the Waimakariri District were released last week, showing a mixed bag of low confidence and steady growth.
Low Business Confidence Despite Steady Economic Growth

The Business Opinion Survey, released twice a year by Enterprise North Canterbury (ENC), saw a staggering 40% drop in confidence in the New Zealand economic situation since the last survey in October 2022. Local business confidence in the New Zealand economy currently sits at net -52%, which is the lowest ever recorded outside of the Covid-19 lockdown.

Survey coordinator Miles Dalton says the drop is unsurprising. “A good part of this outlook will be down to inflation, which is causing profits to drop. In general, sales are actually up, but increased costs are eating into the benefits of that for our local businesses. We are seeing more pressure on businesses as they work on their end of year accounts.”

Despite this, the survey shows that North Canterbury businesses feel more confident about the national economy than New Zealand businesses overall, which is sitting at net -61% confidence. Interestingly, local businesses are also more confident about their own business situation than they were six months ago, up 11% on the last survey.

The Waimakariri Quarterly Economic Monitor (QEM) from Infometrics paints a more positive picture, with local GDP up 3.7% for the year to March placing Waimakariri in the top 11 growth regions in the country. This report also highlights increases in consumer spending, tourism, house values and employment figures, as well as non-residential consents which have increased by a whopping 58% compared to just 11% nationally.

“The QEM shows us that money is still flowing freely in Waimakariri and although some of this increase can be put down to inflation, we also have some underlying strengths here,” explains Mr Dalton. “Specifically, our population is still growing, local tourism is bouncing back and a diversified economy gives us the ability to better roll with the punches, which we’ve seen time and again in recent years.”

However, Mr Dalton says things are likely to get worse. “For many, the negative effects of high inflation have still not kicked in fully. Unfortunately, things are likely to get worse for before they get better for some of our local businesses, so the axiom of ‘prepare for the worst but hope for the best’ has never been truer.”

Read the full North Canterbury Business Opinion Survey here: enterprisenorthcanterbury.co.nz/wp-content/uploads/2023/05/2023-April-NC-Business-Opinion-Survey.pdf

Read the full Infometrics Quarterly Economic Monitor here: enterprisenorthcanterbury.co.nz/wp-content/uploads/2023/05/qem-waimakariri-district-2023-3.pdf

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