Kiwi firms increasingly buoyant despite facing severe skills shortages, NZIER’s QSBO shows - Quarterly Survey of Business Opinion, October 2016
04 October 2016
New Zealand Institute of Economic Research (Inc)
Media release, 4 October 2016
NZIER Quarterly Survey of Business Opinion
Embargoed until 10am 4 October 2016
Businesses look to demand boost ahead
The latest NZIER Quarterly Survey of Business Opinion shows a further strengthening in business confidence over the September quarter, with a net 26 percent of firms expecting improved economic conditions over the coming months.
The improvement in confidence was broad-based across most regions, with optimists outnumbering pessimists in dairy-intensive regions such as Taranaki and Southland. The recent increase in global dairy prices and subsequent upward revision by Fonterra to its dairy payout forecast have reduced the risks to the dairy sector and boosted confidence. Nonetheless, confidence remains strongest in tourism-intensive regions such as Auckland, Otago and the Bay of Plenty.
Firms are also expecting a strong lift in demand in their own business, with a net 32 percent expecting an improvement in own trading activity over the next quarter – the highest level since mid-2014.
Construction remains the key driver of growth, with a solid pipeline of work
The building sector was again the standout sector, with confidence in the sector boosted by a strong pipeline of residential and commercial construction work. Rapid population growth has boosted demand for housing and new office buildings, and firms expect a further ramp-up in building activity over the next few years.
Despite the high levels of activity, capacity utilisation and pricing indicators in the building sector eased.
Skills shortages becoming more acute
Hiring over the past quarter eased, in contrast to the surge in hiring intentions for the next quarter. A net 27 percent of firms are looking to increase headcount in the next quarter – the highest level for 43 years.
Firms report increased difficulty in finding labour, and this may have limited the extent to which firms could increase headcount over the past quarter. The difficulty in finding labour is particularly acute for skilled labour, with shortages at levels not seen since December 2007.
Figure 1 Further boost to firms’ expectations of demand
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