NZ's main centres shine in otherwise gloomy trading for SMEs

Monday 16th July 2012

Auckland, Wellington and Christchurch have topped an otherwise gloomy trading outlook for New Zealand's small to medium size enterprises, according to MYOB's July business monitor.

On a regional basis, 36 percent of Auckland SMEs expect earnings to increase over the next 12 months, followed by 33 percent in Christchurch and 25 percent in Wellington. In the regions, just 8 percent of SMEs expect revenue growth, down from 25 percent in March.

Overall SMEs downgraded their revenue expectations by 6 percent to 36 percent.

"We've been really encouraged to see Auckland trending steadily up in the last two quarters, and Wellington post some excellent results," Julian Smith, MYOB general manager, said in a statement. "We've seen a stark contrast in the earnings and expectations from the rest of the country."

Christchurch-based SMEs remained the most optimistic about a short-term recovery in the general economy, with 25 percent expecting a pick-up in the next 12-months.

Auckland was less sure of a broad-based recovery on 17 percent, while cuts to government spending in Wellington have begun to bite, with just 14 percent of SMEs predicting a short-term recovery.

The regions were less optimistic, with expectations dropping 6 percentage points to 18 percent. Results of the survey were also mixed across industry groups.

"What we are seeing in the earnings for the primary sector in particular, is an industry that remains under pressure from rising transport costs and sluggish export market," Smith said.

SMEs in the finance and insurance sectors were the most optimistic sector, predicting a 44 percent increase in revenue growth over the next year. That was followed by manufacturing and wholesale firms on 31 percent.

Fuel prices again emerged as the key pressure facing SMEs. That was hardest felt in the transport and warehousing sectors, with 40 percent of firms saying fuel prices were placing "extreme pressure" on their business.

That was followed by competitive activity on 27 percent, price margins and profitability on 26 percent and attracting new customers and cash flow both on 25 percent.

BusinessDesk.co.nz

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