Some small businesses are feeling a little less confident about the road ahead, with business confidence falling to a nine-year low in the June quarter according to ANZ's latest quarterly Business Micro Scope survey.
Amongst the 200 polled small businesses, 30% are pessimistic about business conditions – the most since 2009. Confidence slipped in both micro firms (0-5 employees) and intermedia-sized businesses (6-20 employees).
Those confidence levels have dropped since the last report in March, and according to ANZ managing director of Retail and Business banking, regulation is one of the biggest issues that small firms are facing.
“Difficulty finding skilled employees is an ongoing challenge for many small businesses, particularly in construction, manufacturing, services and retail, and it continues to weigh on their confidence. External factors are also impacting confidence levels, including a cooling housing market and intense online and offshore competition for our retailers.
The ANZ composite growth measure for small firms – a proxy for GDP growth – fell across all sectors, with agriculture and construction reaching negative territory.
While sentiment remains pessimistic, the results suggest small firms are still experiencing sustained demand for their goods and services, however, potentially at a decelerated pace.
The survey found that fewer firms intend to hire new staff – a drop of 4% and undoing the short-lived recovery indicated in March.
Small firms also expect to see less profit, mostly affected by the construction sector dropping 54% points to -14%, which is likely reflecting rising construction costs and labour shortages.
Highlights from the June 2018 ANZ Business Micro Scope survey of small firms:
- Net percentages reflect the balance of sentiment, i.e. percent positive minus percent negative responses]
- Our composite growth measure declined to a nine-year low.
- Small firms' activity outlook fell to a net 11% of firms expecting an increase, the lowest reading since 2009.
- Hiring intentions fell to 4% in June, down from the March quarter.
- Investment intentions across small firms slipped 6% points to 2%, led by a drop among intermediate-sized businesses.
- Regulation and difficulty finding skilled employees remain major concerns.
- The composite growth measure fell in all regions, with Wellington remaining the highest but Canterbury and other North Island areas falling into negative territory.