Business confidence slipping—survey

Press, 11 May 1979, Page 17

Business confidence slipping—survey

PA Wellington Business confidence in New Zealand continues to fall says a quarterly Survey of business opinion compiled by the Institute of Economic Research. While 53 per cent of those polled say there has been “no change.” 33 per cent now expect a downturn in general business in the next six months. Last December 16 per cent of those polled expected a downturn while at last September’s poll 32 per cent expressed some optmism.

The institute says the survey is based on the opinions of businessmen about the recent past and future trends in their own business activities. “Although the broad picture remains bleak there are signs, albeit modest, which suggest an improvement in some areas of activity and performance ” The report says the signs include an economyw i d e reduction In unemployment, an

apparent lessening in the rate of decline of overtime, and a strong productivity growth in manufacturing.

The rates of inflation of majot trading partners remained important, but should not have the same impact on interna' price rises this year as in some recent years.

A deteriorating balance-of-payments current account balance was viewed on the ability of the Government to sustain the recent higher levels of domestic activity, the report says. The slide tn consumer confidence, noticeable at the end of 1978, had continued tn the first quarter of 1979 and become more acute.

Each group was more pessimistic than at December. A net 36 per cent of merchants (12 per cent at December), 35 per cent of manufacturers and builders (24 per cent) and 25 per cent of the services group (8 per cent) expect a deterioration in general business.

Manufacturers and builders remain cautiously optimistic, merchants are pessimistic, while a quarter of those in the services sector expect general business conditions to deteriorate during the next six months. Surveyed on its own, the building sector was “unequivocally pessimistic,” the survey said. Performance in the sen-ices sector, m the first quarter appeared to have been highly satisfactory with a 1 per cent increase in the number of employees. Nevertheless most anticipate a decline in employment, overtime and profitability. Wholesalers had a more gloomy outlook on sales than retailers. Both groups forecast declines in general business, in stock volumes, in employment and building investment. In the building sector there was unequivocal pessimism — with falls in profitability forecast to be as widespread as those experienced at March.