The results of the latest six-monthly Business Survey by Venture Taranaki indicate that respondents are ‘cautiously optimistic’ about business conditions within their own industries, but less optimistic about prospects for New Zealand.
Of the 186 respondents, many expected their sales, customer levels and bookings to improve over the next six months. Concerns about COVID-19 restrictions have taken a back seat, superseded by inflation, price of fuel, cost of materials, and availability of labour or skill shortages that came through as the top concerns for Taranaki enterprises compared with December 2021 survey results.
Although business conditions are looking more positive within respondents' own industries, of the participants that completed the recent June 2022 survey, 48 per cent expected the general business situation in New Zealand to deteriorate. When asked the same question for the Taranaki business situation, 36 per cent of respondents expected deterioration.
Only 17 per cent of respondents indicated they expected an improvement to the New Zealand-wide business situation in the next twelve months, compared with 29 per cent in the December 2021 survey. Seventeen per cent is the lowest point for this figure since 2008, which is a telling sign that enterprises believe New Zealand has a rough road ahead before we see the general business environment start to improve.
"We know that inflation, cost increases, and staff shortages are having an impact on businesses," says Venture Taranaki chief executive Kelvin Wright.
"The past two years have been challenging for many sectors and enterprises within the region, and just as we were starting to see some light with border re-openings and the end of snap lockdowns, rising cost of living and inflation have again impacted the business environment on a local and national level. It is a really trying time for our enterprise community right now.”
Respondents were asked to what extent increased inflation has affected their business, and almost 80 per cent said they had been impacted, with 40 per cent having some impact, 32 per cent significantly impacted, and 7 per cent saying it's their most important issue currently.
Nearly half of the respondents had been experiencing the impacts of inflation for the past year, with 19 per cent being affected for more than a year, and 23 per cent experiencing the impact for the past six months. Pressures to increase prices and increase wages and salaries were ranked as the highest factors affecting businesses.
"We're not surprised by these numbers and the pressure points reported by enterprises, as in the last quarter New Zealand’s inflation has soared to 6.9 per cent, which of course has dramatic flow-on effects," says Kelvin.
Fifty eight percent of respondents had already raised their prices, with a further 25 per cent saying they plan to do so. Similarly, 54 per cent of respondents had already increased wages or salaries for their staff, and a further 18 per cent plan to increase pay soon.
"Ongoing skill shortages and difficulties recruiting staff continue to be an on-going issue for many businesses. While we've had some positive movement with borders reopening, some industries still need immigration rules to catch up with the challenges industries are facing in order to meet these shortages," says Kelvin.
Recruitment has been going through its most challenging period within the past 10 years. Of the participants that completed the June 2022 survey, 48 per cent indicated that they were experiencing significant skill shortages or difficulties recruiting appropriate staff.
Fifty percent of the respondents that are looking for more staff are not confident they can find people to fill their needs. Just 26 per cent indicated they were confident of finding people they need within the New Zealand workforce.
"We are working collectively with regional partners to identify the gaps, plan, and re-train, as well as implement national and international campaigns, to support our industries and enterprises so they can meet their talent needs," says Kelvin.
This survey included a special section on the Government's 2022 Budget, which was released earlier in May. Overall, the response from participants was not optimistic about the impact that the 2022 Budget will have on both economy and businesses.
Forty-eight percent of the respondents are concerned that the 2022 Budget will weaken the New Zealand economy, with 34 per cent thinking it will weaken the Taranaki economy. However, the majority of the respondents felt that the budget would not impact their business or industry directly, with a small percentage of the respondents, 14 per cent, thinking the budget would stimulate the Taranaki economy.
