Polson Higgs
Economic Survey Shows Cautious Optimism
From The Press in Christchurch
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South Island business leaders expect a slow recovery in trading conditions as a result of the economic recession but their response to an independent survey reflects cautious optimism. The survey was conducted by two of the South Island’s leading chartered accountancy firms, Polson Higgs and McCulloch & Partners. The two firms have been conducting such surveys since August, 2007, to obtain better information on the issues facing South Island business leaders and the strategies they were employing to address those issues.
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Previous surveys focused on challenges associated with leadership, organisational culture, employee recruitment and retention, environmental issues and managing in a recession. The July, 2009, survey continued the focus on managing in a recession and included questions on investment intentions and employee responses to working in a recession. Business leaders were given a list of 15 possible trends and asked to identify those that they thought would most likely apply to New Zealand businesses during the next five years. While many businesses were still concerned that their growth would be handicapped by a slow recovery in overall trading conditions, they were significantly more optimistic about their growth prospects than they were in December, 2008. Business optimism, it seems, is returning. Whereas in December, 2008, 40 per cent of business leaders expected their businesses to shrink during the next two years, this proportion halved to 20% in July, 2009. The largest single group was now expecting modest (1% to 5%) growth over the next two years. Respondents were also more optimistic about the short term growth prospects for their market in general. Looking further forward, fewer than 10% of respondents expected their businesses or their market in general, to shrink in the next five years. The survey showed businesses in the last 12 months were most likely to have increased investment in sales and marketing, IT infrastructure and staff training. In contrast, they were most likely to have reduced investments in plant and equipment, and in research and development. This suggests businesses have been more focused on improving their short term financial results through increased sales and efficiency gains than their longer term positions through investment in plant and research and development. A similar situation is expected during the next 12 months. Compared to December, 2008, more businesses were reviewing their internal structures and securing lower cost finances. In contrast, fewer businesses were seeking to secure trained staff and raise price margins. Environmental matters have taken greater significance as optimism has returned. In late 2008, there was a significant drop in the proportion of companies reporting environmental issues were important in their business. The latest survey shows they have assumed greater significance again but not to the extent reported in May 2008. As in previous surveys, the main motivations driving environmental issues were enhancing brand reputation, reducing costs and responding to customer demand. Related link:
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Last updated: 28th Aug, 2009 | 3:58 am
