Pessimism could see more lay-offs— report

Press, 2 October 1987, Page 1

Pessimism could see more lay-offs— report

By

GLEN PERKINSON

Pessimism among Canterbury businesses could see about a quarter of the region’s firms lay staff off In the coming months, according to the New Zealand Institute of Economic Research. The institute also predicted that about half the region’s businesses would make no investment in buildings or machinery before the middle of 1988. More than a third of the firms surveyed in the quarterly survey of business opinion in Canterbury believed the New Zealand economic situation would deteriorate before Christmas. The report was commissioned by the Canterbury United Council and includes about 140 manufacturers, builders, merchantretailers, and servicing firms in Canterbury. Manufacturers reported, on balance, that their orders, sales and output had fallen sharply

and more widespread falls were expected during the next months. “Builders report, on balance, that domestic activity in their sector, although still falling, has become much less subdued but .they have become negative (concerning prospects to the end of September). “The services indicate sharply reduced growth ... with a further reduction likely in the short term,” the report said. However, merchants Indicated growth levels to the June quarter had been similar to the previous quarter and this trend was expected to continue. < AH sectors Indicated insufficient demand was behind the < decline in economic optimism. A widespread trend was the < scarcity of skilled labour. i Fifty-six per cent of manufacturers believe the economic situation wiU deteriorate, 31 per cent believe there will be no j

change, and 13 per cent predict improvement Manufacturers — 33 of the respondents — believed investment would decline by mid-1988. About five considered it would increase, 10 thought it would remain the same, and 15 said there would be less. The sector’s - employment trends were mainly static or downward. While 55 per cent expected employment in the industry to remain the same, 27 per cent expected drops in staff employed. MeanwhUe, builders were evenly divided on the economic situation. While just 14 per cent expected no change in the climate, 43 per cent considered a deterioration and the same amount an improvement Employment in the industry was more likely to remain static with 86 per cent of respondents predicting this. Just 14 per cent

thought there would be a drop. However, no firin' entertained increasing numbers. >. ' Wholesaling and retailing merchants were mort opttmistc. While 61 per cent expected no change in the economic situation 28 per cent saw Improvement Nevertheless, 33 per cent, still Indicated , employment would fall off within the industry. The most optimistic sector was the servicing industry where employment was expected to be maintained at present levels or to Increase. Just 9 per cent of respondents Indicated employment would drop while 18 per cent said it would increase. However, the sector was divided on what the future held. A third of respondents were equally divided between deterioration and Improvement while the bulk considered the situation would remain the same. • ‘