WELLINGTON, Jan 18 (NNN-XINHUA) – New Zealand companies have shown “the weakest” confidence since 1961, as they prepare for tough times ahead, due to deteriorating labour shortage and hiking interest rates.
The latest New Zealand Institute of Economic Research (NZIER) Quarterly Survey of Business Opinion, published yesterday, showed a deterioration in business sentiment and activity.
A net 73 percent of businesses expect general economic conditions to deteriorate over the coming months, the weakest over the survey’s history, according to the survey, conducted from Nov 28, 2022 to Jan 9, 2023.
The survey reflected the effects of the more stringent monetary policy in Nov, when the Reserve Bank of New Zealand indicated that, it would take interest rates higher than initially expected, to rein in inflation.
The survey results showed companies are now looking to reduce staff numbers and pare back on investment plans. However, shortages of staff remain acute, despite the decline in hiring, constraining business development.
Sales have also been reported as the primary constraint for their business, suggesting weakening demand is beginning to impact more businesses, according to the survey.
Although a greater proportion of businesses have passed higher costs on, by increasing their prices, profitability has weakened, it said.
Builders and retailers were the most downbeat across the sectors, in the Dec quarter, it added.
The NZIER conducted its quarterly survey of business opinion since 1961, which has become New Zealand’s longest-running business opinion survey. It acts as valuable leading indicators, about the future state of the New Zealand economy.– NNN-XINHUA
