4 Jan 2012

NZ businesses 'optimistic' about year ahead

3:49 pm on 4 January 2012

An international survey has revealed a lift in New Zealand business confidence about prospects for the coming year.

The quarterly Grant Thornton International Business Report shows confidence has picked up again after dipping in 2011, and is now significantly higher than in Australia.

Thirty-six percent of those surveyed are more upbeat about the coming year, compared with 32% in the previous quarter.

Grant Thornton New Zealand says businesses are looking up because they see strong export markets and growing sales in emerging markets such as China and India.

In contrast, Australian business confidence has declined for the fourth consecutive quarter to 24%, while in the United States it is just 1% and in Britain minus 35%.

A partner at Grant Thornton, Peter Sherwin, says it is the first time New Zealand business optimism has gone significantly ahead of Australia's.

Mr Sherwin says this can be in part attributed to an improving climate for jobs in New Zealand, the unemployment rate lowering and the exchange rate starting to come down from highs seen in the last part of 2011.

He says, while the report shows most employees are likely to get a pay rise this year, many businesses will not be investing in research and development, which he sees as a concern.

"Research and development is spending money today and the expectation that it is going to benefit businesses and the country two, three, four years down the track.

"So whenever you see a reduction in research and development, it does raise the warning bell."

The report indicates businesses see a lack of workforce skills as a major impediment to growth this year, Mr Sherwin says.

The survey is taken from a sample of 11,000 businesses from 39 countries.

Business has "high hopes" for 2012

Chief Executive of Business New Zealand Phil O'Reilly says businesses have "high hopes" for the new year.

He says part of this is a subjective reaction to putting behind them the turmoil of 2011, when the country faced natural disasters, industrial accidents and all sorts of issues in the economy as well.

"So businesses are saying surely it can't be as bad as the last one."

However, Mr O'Reilly says there are objective reasons for confidence, notably the relatively high dairy prices New Zealand is receiving.