Business confidence is continuing to rise despite expectations interest rates will increase early next year and a looming skills shortage.
For the fifth successive quarter the level of business optimism has increased in regard to how Auckland businesses view both the economy’s overall performance and how they assess their own prospects in the period ahead.
A year ago, just 29% of Auckland businesses believed the general business situation would improve in the following six months. Asked the same question earlier this week, 61% of the nearly 1000 Auckland Chamber of Commerce members who took part in the quarterly survey predicted the environment for doing business would improve in the next months.
Similarly, in respect of how businesses see their own business prospects over the next months, 63% predict they will improve compared to just 47% of this view last November.
However, the trend of recent surveys showing an expectation that interest rates will rise in the next 12 months is maintained. A year ago, just 14% of respondents believed interest rates would increase during the following 12 months compared with 63% of this view in this week’s survey.
Reports of a growing skills shortage is reinforced in the finding that 31% of businesses are having difficulty finding employees with the right skills compared to 23% a year ago.
Michael Barnett, Auckland Chamber of Commerce chief executive, suggests that part of the explanation for the improved optimism could relate to a growing belief that the Government is serious in wanting to encourage business to improve productivity through its recent focus to address basic infrastructure issues such as transport and housing and the momentum of the Christchurch rebuild.
“The persistent difficulties businesses are having in recruiting suitable staff linked to Auckland’s high youth unemployment levels, around 20% overall for 17-24 year olds and as much as 30% among Maori and Pacific youth groups, is an area where we clearly need to lift our game,” said Mr Barnett.