Summary
The September 2024 Taupō District business sentiment survey indicates a stabilised yet cautious outlook compared with previous surveys, with overall business confidence holding steady at 42% and the percentage of businesses feeling concern about their current business has dropped to a low of 29%.
Key barriers to growth include inflation (58%), skills shortages (36%), political uncertainty (23%), cost of capital (21%), and supply chain issues (20%). While inflation remains the primary concern, skills shortages have decreased, indicating improved labour market conditions. Political uncertainty has improved, and concerns over the cost of capital have dramatically reduced. The proportion of businesses reporting 'no major barriers' to growth has risen to 17%.
Despite these positive trends, revenue challenges persist, with only 24% of businesses reporting an increase in revenue compared to the previous year, and 47% of businesses have experienced revenue declines. Profitability is also under pressure, with half of the businesses reporting profit decreases, although 42% anticipate increased profitability in the coming year.
Business sentiment regarding New Zealand's current economic performance has lifted, with 17% of businesses perceiving growth. However, 55% still view the NZ economy as being in a slowdown. This sentiment is reflected in the views on Taupō's economy, where 17% of businesses are currently experiencing growth. Looking ahead, 33% anticipate improvement in the Taupō district economy over the next 12 months.
While staffing levels remain stable for 56% of businesses, the percentage reporting staff increases has decreased. Notably, 82% of businesses perceive a skills shortage, particularly affecting the Health, Hospitality, and Education sectors.
In conclusion, the survey reflects a stabilised but cautious outlook for the business environment. While key barriers to growth show signs of improvement, ongoing challenges related to inflation and profitability highlight the need for strategic planning and adaptability among businesses in the current economic climate.
Business Confidence
Business confidence has maintained at 42%, indicating stabilised optimism compared to 2023. Neutral sentiment rose to 29%, while the proportion of worried businesses decreased to 29%.
Business Barriers to Growth
The top barriers to business growth were inflation, skills shortages, political uncertainty, cost of capital, and supply chain issues. The business feedback between April 2024 and September 2024 reveals several key trends and shifts in challenges faced by businesses on barriers to growth:
Inflation remains the leading concern, with only a slight decrease from 59% in April to 58% in September, the persistence of inflation as the primary barrier reflects ongoing cost challenges in the economy.
Concerns about skills shortages have dropped, from 46% in April to 36% in September. However, with over a third of businesses still citing it as a concern, skills shortages remain a significant barrier for many.
Political uncertainty saw a decline, from 46% in April to 23% in September.
The concern over the cost of capital saw the most dramatic drop, from 57% in April to just 21% in September. This could indicate an easing in interest rates or improved access to funding.
Supply chain issues remain relatively consistent, with a slight improvement from 22% in April to 20% in September.
The percentage of businesses reporting ‘no major barriers’ to growth increased significantly, from 8% in April to 17% in September. This is a positive sign, indicating that nearly one in five businesses are not facing significant obstacles to growth.
Business Performance - Revenue & Profitability
The business revenue performance data reflects a challenging period, only 24% of businesses reported a revenue increase compared to the previous 12 months, continuing a steady decline in revenue performance. With 47% experiencing a revenue decrease, indicating that nearly half of businesses are struggling with declining financial outcomes.
Businesses are also facing increasing challenges to profitability, with 50% reporting profit declines, and only 23% seeing an increase. Profitability growth, which peaked in late 2023, has steadily declined throughout 2024 as economic pressures mount. The rise in businesses experiencing profitability decreases suggests that external factors like inflation and higher costs are squeezing margins, making it harder for businesses to maintain or grow profits.
Looking ahead to the next 12 months, 42% of businesses expect an increase in profitability, showing optimism for future growth. 25% anticipate their profits will remain consistent, while 27% expect a decrease.
Business views on the New Zealand Economy
Businesses seeing growth in the current NZ economy increased to 17% in September 2024, up from just 5% in April 2024. This marks the highest level of optimism seen, indicating that a growing number of businesses perceive signs of recovery or economic improvement. However, the view that the economy is in a slowdown remains the dominant sentiment, with 55% of businesses holding this view.
Looking ahead to the next 12 months, 46% of businesses expect the New Zealand economy to improve, a figure that has remained stable since late 2023. Only 20% of businesses expect to see deterioration, and a growing number of businesses anticipate that the economy will remain the same.
Business views on the Taupō economy
Businesses seeing growth in Taupō's current economic performance has steadily decreased from a peak of 28% in November 2023 to 17% in September 2024.
In the coming 12 months, 33% of businesses anticipate improvement in Taupō’s economy, a decline from 54% in April 2024. 46% of businesses now expect the economy to remain unchanged, suggesting that many foresee stability rather than growth.
Staffing & Skills
56% of the businesses maintained consistent staffing levels in the past 12 months. However, businesses were less likely to have increased staff levels, with only 12% citing an increase. The percentage of businesses reporting a decrease in staffing has doubled, rising from 16% in April 2024 to 32% in September 2024.
In the next 12 months, 20% of businesses expect to increase staffing, a drop from 33% in April 2024. 70% plan to maintain their current workforce, indicating a growing focus on stability. The percentage of businesses expecting to reduce staffing has decreased to 10%. 82% of businesses surveyed believe there is a skills shortage in the Taupō district, with the Health (60%), Hospitality (33%) and Education (27%) sectors being cited as the most affected.
Responding to Climate Change
Consistent with previous surveys, 48% of businesses are not considering the risks or impacts of climate change on their business. Of the businesses responding to the risks of climate change, the most common action (23%) is to include climate change risks in their business strategy/plans.
Expectations for the future
The business community appears to be taking a cautious approach to growth, with 47% intending to stay the same size and 35% seeking moderate growth, a decrease on previous surveys. While there is a small rise in those aiming for significant expansion (8%), uncertainty has also increased, with 6% of businesses unsure about their future plans. The Professional Services sector leads the way among businesses looking to grow in the next 12 months, representing 37% of those with expansion plans.
Business Sentiment Response Overview
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