Kiwi businesses don't expect World Cup boost

Kiwi business owners are not expecting much of an economic injection from the Rugby World Cup, as confidence in a near term recovery all but collapses, according to the latest MYOB Business Monitor, a monthly survey of 1000 companies.

The monitor, released today, shows that less than a quarter (23%) of businesses expect the economy to recover in the next 12 months, and just 5% expect to see recovery in the next 6 months.

This is in stark contrast to the same survey a year ago, in which almost half of Kiwi business owners (49%) expected to see a recovery by now.

Confidence in the manufacturing and wholesale sector has slumped from 59% in the last report – released at the end of 2010 – to just 28% in the current survey.

Despite stronger economic performance, the rural sector shows very low confidence, with just 15% expecting recovery inside a year.

The number of businesses reporting revenue decreases over the past year (32%) also outweighs those reporting revenue gains (28%).

This is a slight improvement from the end of 2010, with businesses reporting revenue increases up slightly from the last Monitor survey (25%).

However, despite growing pessimism, pipeline work – a key measure of the monitor – has improved, with a third (31%) of businesses reporting more work or sales in the next quarter – up from 26% at the end of 2010.

MYOB general manager Julian Smith said the sentiment of businesses reflected just how long the nation’s business owners have struggled with the effects of the recession, and how fragile are any signs of recovery.

He said the effects of the Christchurch earthquake have also had a real impact on the way business owners feel about the chances of recovery, with about 50% of businesses outside of Canterbury expecting to take a hit from the natural disaster.

“In terms of their own performance, though, businesses expectations are slightly stronger – with 36% expecting revenue increases in the next 12 months, and just 13% expecting decreases,” says Julian Smith.

“Auckland businesses are the most bullish about their own futures, with 39% expecting to see revenue increase in the next 12 months, while employers in mid-sized businesses are also more confident, with 52% of small (5 – 19 employees) and medium (20 – 199 employees) -sized businesses expecting revenue increases.”

Rising fuel prices could be a problem: 42% of all businesses expect fuel prices to put considerable pressure on their business over the next 12 months.

Transport and warehousing sector businesses (74%) and agriculture, forestry and
fishing businesses (59%) are by far the most concerned about the rising cost of fuel.

Other pressures businesses face over the next 12 months are cash flow, seen as putting a lot or extreme pressure on their business over the next 12 months by 28% of businesses in the current Monitor, price margins and profitability (27%) and competitive activity (24%).

More business owners are seeking help, with 87% of all business owners surveyed seeking expert advice on how to run their business more effectively.

“Its very encouraging, with businesses facing a wide range of pressures, that more Kiwi business owners are getting help from their accountant (64%), business associates (32%), their bank managers or advisers (26%) or business mentors (17%),” Mr Smith said.

The report also shows three quarters of all Kiwi business owners would vote for any political party that is committed to simplifying provisional tax rules and processes, he said.