Business owners should be relishing the thought of returning
to work in the New Year given that New Zealand business confidence is indicated
to be well up on last year, according to the Grant Thornton IBR survey.
Pam Newlove, Co-Chair and Partner, Grant Thornton New
Zealand Ltd, said that business confidence has lifted 22% on this time last
year to 58%, well ahead of neighbours, Australia, where confidence was up only
7% to 31%.
“New Zealand business owners have accepted that the tough
grind we’ve been going through over the last couple of years is the new norm
and they are just knuckling down and doing the business. They have learnt to be smarter about how they
do business rather than lament the recent difficult times. Successful operators are identifying their
niche products or services and capitalising on opportunities and securing
market share that way.
“Australia may not have suffered the level of pain that we
endured during the global financial crisis, but with the slowdown of China and
the fall in commodity prices, indicators have turned south in the ‘lucky
country’ with a slew of major redundancies in some of the larger companies.
“Employment aspirations show that 34% of New Zealand
companies are looking to employ more staff in 2013 compared with only 8% in
Australia.”
New Zealand companies have almost twice the level of
optimism currently being experienced in Australia when it comes to forecast
revenues and profitability.
“Seventy per cent were expecting increased revenue over the
next 12 months and 58% were expecting an increase in profitability. For
Australia the figures were 36% and 34%, another indicator of the shape of their
economy,” she said.
Lack of skilled labour (38%) red tape (31%) and a shortage
of working capital (28%) were all cited as constraints to growing and expanding
businesses.
“Red tape is interesting, although it is noted as a
constraint, it is less of a concern in this country compared with many
others. Interestingly, New Zealand is
often seen as an easier place to do business relative to other jurisdictions.
“The overall picture is one of an improving economy but
there are some key messages that have come out of the survey. Businesses must
look after and retain their good staff, continue to educate and upskill them
and continue to invest energy and time into maintaining and managing customer
relationships,” she said.
The global outlook
Hopes for a strong start to economic recovery in 2013 look
to be diminishing as business confidence in mature economies continues to fall
away caused by concerns over the United States ‘fiscal cliff’ and ongoing fears
over the long-term viability of Eurozone is dampening growth prospects,
according to the survey.
The IBR reveals that global business optimism stands at just
net 4% heading into the New Year. This halts a rally in confidence seen in the
first half of 2012, when global business optimism reached 23%, and brings it
nearer to the 0% level observed this time last year.
The fall in global business optimism has been largely driven
by a huge fall in the world’s largest economy, the United States. Optimism
amongst US business leaders climbed to 50% in Q2 this year, but slumped back to
-4% in Q4 – the lowest since the depths of the financial crisis. Expectations
for increasing revenues (down 10 percentage points) and profits (down 9) both
fell sharply over the past three months. This chimes with research from Grant
Thornton US which suggests 40% of CFOs have delayed decision making because of
fiscal cliff concerns.
d Nusbaum, CEO of Grant Thornton International, said: “There
is no question that protracted negotiations over how to resolve both the
sovereign debt crisis in the Eurozone and the fiscal cliff in the United States
have weighed heavily on business confidence over the past six months. With the
economic outlook clouded by these issues, business investment becomes a much
riskier proposition for many.
“The hope, both in the United States and around the world,
is that these issues can be resolved and that this drop in confidence is
temporary rather than the start of a longer decline.”
Great article written by crew at
Grant Thornton
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