Business optimism on rise in Auckland

By Phil Boeyen, ShareChat Business News Editor

Tuesday 19th March 2002

A survey of Auckland businesses has shown strong optimism for the next six months although interest rates are expected to rise.

The survey from the Chamber of Commerce found that 64% of respondents believe their own business situation will improve over the next six months but 60% are predicting interest rates to rise in the next year.

The overall level of optimism about business prospects over the next six months has risen to 40% compared to the 33% recorded in the previous survey last November.

"The 40% level of optimism is now 4% higher than the 36% recorded at a similar survey in August 2001 - a month before the September 11 events in the United States," the Chamber of Commerce says.

Of the 600 internet responses analysed in the survey 36% of businesses claim it is currently harder to find skilled staff than three months ago, slightly higher than the 33% recorded in the last survey.

Lack of demand continues as the main factor holding firms back from expanding, cited by 37% of respondents. 21% said finance was the reason followed by capacity at 14% and labour 13%.

Chamber of Commerce chief, Michael Barnett, says despite the optimism there are some obvious concerns.

"While the government can clearly take a comforting message from the survey - optimism has increased on the previous two surveys, and those expecting conditions to deteriorate is at a record low 8% compared to 16% last August - on the other hand the survey reveals some warning signs.

"With 60% of respondents predicting interest rates to rise in the next 12 months, compared to 30% to the same question in August last year, the question has to be asked: Is this level of optimism as good as it gets?"

Mr Barnett says it is almost as if the market has a built-in expectation that when growth signs appear, the Reserve Bank Governor Don Brash will step in and snuff the optimism by lifting interest rates.

The Reserve Bank is due to outline its latest Monetary Policy Statement on Wednesday.

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