NZD updates

New Zealand General Business Situation To Deteriorate In Next Six Months- Auckland Chamber Of Commerce Survey
3/25/2008 2:52:18 AM The confidence level of businesses in the Auckland Region declined sharply in the month compared to December, the results of a survey done by the Auckland chamber of Commerce said. Additionally, the survey concluded that the general business situation in New Zealand will deteriorate in the next six months.

Business owners are progressively growing more pessimistic, with 31% of the businesses in Auckland expecting their performance to deteriorate in the month compared to only 11% a year ago. The report also noted that situation is of concern to the New Zealand government as the Auckland region generated more than a third of the nation`s production.

The pessimism was evident in many areas. The survey also revealed that business owners were now less willing to make investments in plant and machinery, would demand lesser staff over the next three months, and would face significantly higher costs which are likely to eat into their profit margins. Businesses also expected domestic demand from customers to fall in the next quarter.

The survey results also showed that business owners expect interest rates to rise over the next year. Sixty-five percent of the respondents expect interest rates to rise compared to only 50% in the December survey. Also the rise in mortgage rates is expected to hurt small businesses, which use borrowings secured against mortgage.

Business owners would also not be able to absorb further price rise as the demand was slowing and turnovers were falling. The Chamber of Commerce said the time was right to plan for small investments in the engine industry rather than go in for huge capital investments funded by the State. If this was not the case then economic activity would come to a standstill.