Change in Alert Levels impacts Businesses’ Confidence, sign of things to come

Change in Alert Levels impacts Businesses’ Confidence, sign of things to come

Results from the Central New Zealand business confidence survey may be a telling sign of things to come says Business Central and the Wellington Chamber of Commerce.

"Our survey was in the field during the transition up the COVID alert levels, and showed businesses had a heightened level of uncertainty and a loss of confidence after the Prime Minister’s announcement on the 11th August," says John Milford, Chief Executive of Business Central and the Wellington Chamber.

"While this is to be expected, we’re concerned that it’s a sign of things to come."

The latest business confidence survey, complied by across the Wellington Regional Chambers of Commerce and Business Central, was conducted during a 12-day period between the 3rd and 14th August, including three days when New Zealand changed alert levels, Auckland to level three and the rest of the country to level two.

"Retail sales and traffic reports were all telling us that Kiwis were getting out and supporting their local businesses, and that was reflected in the early confidence numbers.

"Had we continued in level one, we would have seen improved confidence numbers across all five indicators.

"But the sudden drop in confidence after the August 11th announcement meant most indicators remained the same or were worse than our May survey results.

"The results are also further evidence that businesses need certainty and stability in order to rebuild their confidence. With this move back up to level two, many will be back into survival mode.

"Overall, businesses’ confidence in the New Zealand economy dropped further from May with a net 61 per cent expecting the national economy to be worse in 12 months’ time.

"A significant majority of the business community are also expecting the regional economy to be worse in 12 months’ time, with a net 73 per cent of respondents responding negatively.

"A small sign of optimism within the business community, however, is the improvement in businesses’ expectations of their own situation in 12 months’ time. While still a net negative 7 per cent result, there is a month-on-month improvement on our May and March numbers, which were net negative 21 and 13 per cent respectively on the same question.

"The survey also asked respondents about barriers to business and the open-ended results were telling. Before the alert level announcement, consumer behaviour and staffing issues were the top two issues, 22 and 21 per cent of respondents had some issue relating to these barriers, respectively.

"But after the alert level announcement, direct mentions of ‘COVID’, ‘lockdown’, and ‘virus’, jumped from 11 per cent to 40 per cent.

"COVID and the alert level change certainly influenced businesses’ immediate concerns and created an uncertain environment as businesses had to re-adjust back to life under level 2 restrictions.

"For many businesses, the return to level 2 has also meant a loss of revenue. Not only have people stayed away from shops and eateries, but clients and other businesses are putting projects and plans on hold.

"My message to the community would be; stay safe, wear a mask when you’re out, scan the QR codes where ever you go, and please continue to go out and support your local businesses if you can."

The quarterly survey was sent to Wellington Regional Chambers of Commerce and Business Central members across New Zealand - from Gisborne and New Plymouth down to Nelson. There was a total of 335 responses, 275 responses were before the alert-level announcement, and 60 responses came after the announcement was made.

The survey also asked several questions related to the 2020 General Election. These results will be released along with the Wellington Chamber of Commerce’s Election 2020 Manifesto at the Wellington Chamber & Dominion Post debate on Wednesday, 23rd September.

The next quarterly business confidence survey will take place in November 2020.

Contact: John Milford

Phone: 027 580 3064