I take polls with a healthy grain of salt. I take polls of “business confidence” with a whole salt shaker. None the less, this latest poll expresses concerns that seem to be well founded:
NZ business confidence plummets
New Zealand business confidence plummeted this month, and while the decline was worst in Canterbury, the latest survey shows gloom has set in nationwide following the devastating earthquake.
A net 8.7 per cent of businesses expect worse times ahead, according to the National Bank Business Outlook, a turnaround from last month’s survey where a net 34.5 per cent were upbeat about the next 12 months. That marks the second-largest monthly drop in the survey’s history.
A wave of gloom has seen profit expectations evapourate and firms expecting to shed jobs. The downbeat tone was led by the Canterbury region, where headline confidence tumbled 92 points and firms’ expectations of their own activity slumped to a negative 8 per cent from a net 47 per cent positive. The business survey follows the quarterly measure of consumer confidence, which tumbled into negative territory on the back of the quake.
“The implication is simple – this is far from a local issue,” said National Bank chief economist Cameron Bagrie. “It’s an economy-wide challenge. Facing exceptional times we should hardly be surprised to see exceptional movements in confidence.”
Christchurch is our second largest city. Many businesses have not yet reopened, and many never will. That affects trade, and supply & demand relationships all around the country. About a third of the Christchurch workforce are not currently working, and a huge number will lose their jobs permanently. That affects the customer base of businesses all around the country. These cold hard realities are starting to sink in. No wonder confidence is falling.
At this time in our history we need government leadership like we have never needed it before. But the signs aren’t good. Even usually friendly jounos are calling Brownlee’s Canterbury Earthquake Recovery Agency (CERA) a “catastrophe”. We’re 5 weeks out from the quake, but CERA still won’t even exist for weeks, and Mayor Bob Parker is conceding that “it would be next year before any significant construction could begin”. English and Key don’t seem to agree on how the recovery should be paid for. The emergency package that is supporting those out of work is being wound back (which is really going to help a city on the edge).
In the midst of all the Nats claim to be optimistic about growth. But these are the same Nats who promised us an “aggressive recovery” that would bring us “roaring out of recession”, and instead flatlined the economy and (with some help from the quake) drove us in to an all time record budget deficit. So when it comes to their judgement on the economy, I wouldn’t hold my breath.