A second round of business optimism stats this week show that Kiwi business confidence is on the rise.
The Grant Thornton International Business Report (IBR) was released yesterday, with New Zealand up 8 percentage points to 52 percent percent this quarter in the optimism percentage balance ranking. While the ranking shows us placed 18th of the 39 countries surveyed, internationally recovering levels of business optimism hit a wall in the second quarter of 2011, and New Zealand was one of only a handful of countries to experience increased confidence.
This comes after the national NZIER survey was released earlier this week showing a similar trend—that Kiwi business confidence is bouncing back this quarter following the Christchurch earthquake in February.
And what’s more, we’re trumping the Aussies. The research reveals that across many countries there has been a dramatic quarter-on-quarter decline in levels of business optimism, led by the ‘Lucky Country’ Australia.
Grant Thornton New Zealand partner Peter Sherwin says that Australia’s 44 percent decline in confidence from 2010 to 2011 is the highest for any country surveyed.
Earlier this week NZIER chief executive Jean-Pierre de Raad said slowing economic activity in Australia and our current high exchange rate would promote growth back home. The NZIER survey similarly showed NZ’s confidence on the up, with “moderate growth” expected over the next quarter.
Sherwin of Grant Thornton agrees, saying the figures reveal a much more positive New Zealand compared with Australia.
“Maybe we are starting to close the gap after all? Compared with a year ago, a net 12 percent more New Zealand businesses are looking to invest in plant and machinery, compared with -7 percent in Australia. When this is matched with the fact the employment intentions of New Zealand companies are increasing, whereas Australia’s are declining, then a growth pattern is starting to emerge.
The outlook for employment and wages is looking rosy, too.
“The lift in business expectations in New Zealand between Q1 and Q2 is startling and in some sectors has doubled. Compared with Q1, the number of businesses looking to employ has jumped from 15 per cent to 42 percent.”
Australia, on the other hand, was showing an overall decrease this quarter, he said.
Sherwin says a net 78 percent of kiwi businesses expect to increase wages in the next 12 months, which is up from 55 percent a year ago.