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ANZ Business Micro Scope - June 2018 print Print

Small firm business confidence slipped to a 9-year low in June after taking a dive in December last year.

That sinking feeling

Business confidence among small firms fell to a nine-year low in the June quarter, according to ANZ’s quarterly Business Micro Scope survey.

A net 30% of small businesses were pessimistic about general business conditions, the highest result since March 2009. Confidence slipped in both micro firms (0-5 employees) and intermediate-sized businesses (those that employ 6-20 employees), unwinding gains in confidence reported in March.

“Regulation remains the biggest concern facing small firms, particularly those in agriculture and construction sectors,” said Antonia Watson, ANZ’s Managing Director Retail and Business Banking.

“The proposed changes to employment laws, the minimum wage, foreign investment and environmental regulation are cited as reasons for one of the lowest business confidence results in a decade.

“Finding the skilled employees is an ongoing challenge for small business, 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 key proxy for GDP growth – fell across all sectors, with agriculture, construction and retail 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.

Hiring intentions fell to 4%, slipping away from a short-lived recovery seen in March and affected by drops in the construction and agricultural sectors.

Profit expectations fell deeper, affected by the construction sector dropping from 54% to -14%, which is likely reflecting rising construction costs and labour shortages.

Read the full report (PDF, 196KB) 

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, falling from March quarter.
  • Investment intentions across small firms slipped 6% to 2%, led by a drop among intermediate-sized businesses.
  • Regulation and difficulty finding skilled employees remains a major concern.
  • The composite growth measure fell in all regions, with Wellington remaining the highest but other North Island areas falling into negative territory.

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