Business confidence in the Wellington region's economy has made a sharp reversal to the drop suffered at the end of 2016, according to the latest Wellington Chamber of Commerce Business Confidence Survey, sponsored by Getsmart.

A net 52 per cent of business respondents now expect the local economy to improve over the next 12 months, a significant improvement on the net positive of just 34 per cent in the December survey. That was itself down from 62 per cent in September.

In the latest survey, just 7 per cent expect the local economy to decline, with 59 per cent expecting it to improve and 33 per cent no change.

But Wellington businesses' confidence in the national economy has slightly declined, with a net 43 per cent expecting improvement, compared to 48 per cent in the December quarter. Some 53 per cent of respondents expect the national economy to improve, 37 per cent to remain the same, and 10 per cent to decline.

The survey was conducted over a two-week period in March.

In line with the increased optimism in the local economy, a majority of business are indicating a secure outlook for their own business situation. A net 61 per cent say they expect to see an improvement over the next 12 months – compared to 50 per cent in December and 61 per cent in September. Just 8 per cent are pessimistic about the outlook for their own business.

Businesses continue to expect a steady increase in earnings, with a net 57 per cent forecasting an improvement, compared to 53 per cent in December and 55 per cent in September. Of all respondents, 66 per cent expect an improvement while just 9 per cent expect earnings to decline.

The number of businesses forecasting more investment in plant and equipment over the next 12 months has improved to a net 44 per cent from 36 per cent in December. Just 5 per cent are not expecting to invest more, while 49 per cent say they will and 39 per cent say they will spend about the same.

Intentions to hire staff remain positive and are slightly up on December. When asked what changes they expect to staffing numbers over the next three months, a net 33 per cent say they expect to be looking for more staff, slightly up from a net 29 per cent in December.

Finding skilled staff continues to be a challenge for many businesses, with just slight improvement since December. Just 5 per cent say it is now easier to find skilled staff than it was 12 months ago, while 38 per cent say it is harder.  When asked unprompted what barriers are holding back their business, an inability to access or attract skilled staff is again the No 1 issue. This is consistent with the Chamber's surveys in December, September and June last year.

Earthquakes are cited as the single biggest impediment to growth in the local economy by 35 per cent of respondents. This is followed by infrastructure (21 per cent of respondents) and transport issues (20 per cent), specifically roading and the airport.

Chamber of Commerce Chief Executive John Milford says the turnaround in confidence in the region's economy comes as no surprise.

"Confidence suffered a big hit in December after the earthquake-flood double-hit in November.

"Those events hit confidence hard, and though most businesses were back on their feet within days, they had an impact. That showed clearly in our special earthquake survey, when more than 62 per cent said they were impacted by damage to premises and stock, staff and freight disruption, and a reduction in business activity.

"Despite all that, we did detect an underlying confidence, with most of our numbers still running higher than national expectations, and that has continued in the latest survey.

"In our report in January we predicted there would be positive movement in the March survey, and we have not been disappointed.

"Though issues raised by the earthquake remain top of mind for many businesses and building owners, it's back to business for most.

"GDP remains strong, even if it's come back a little, consumer spending is steady, and there are plenty of jobs available.

"The increase in the number of businesses indicating a secure outlook for their own situation, a steady increase in their earnings, increasing investment in plant and equipment, and positivity around hiring intentions is proof that we are back on track.

"We're a hardy lot, and it shows."

Wellington businesses also have more confidence in the national economy than other business surveys show, even though the latest survey shows a slight decline.

"The ANZ survey last month showed confidence in the national economy at just a net 16 per cent, down from 21.7 per cent. In our survey, a net 43 per cent were confident the national economy would improve over the next 12 months.

"Locally, we have come through a tough time in pretty good shape, and I expect the optimism shown in this survey to continue to grow."

For more information contact Brent Webling 021 821 383  

Eds note – Net percentage is the balance of sentiment, positive minus negative responses.

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