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Confidence takes a tumble in latest Waikato Rapid Sentiment Survey

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A recent survey conducted among 504 businesses in Waikato indicates business confidence has fallen sharply in the latest lockdown, with Net Confidence in the economy declining to -20 percent from +3% in March this year, but still better than the -31 percent during the August 2020 lockdown.

Te Waka chair, Hamish Bell says: “The latest lockdown is delivering a huge reality check for many.  But while the trend is backwards, confidence is not as low as it was during last year’s lockdowns, suggesting the economy is in a better place to handle the challenges thrown by Delta,”

He added: “But we must remain cautious as things are moving fast and the impact of an extended lockdown period could be material.”

Net confidence in the Waikato economy is more positive, but has also declined to -2 percent from +11 percent in March (-14% in August 2020).

Businesses are also less confident about their sectors, with net confidence at -9.6 percent (+11% in March).  But when it comes to respondents’ own businesses, confidence is positive at +4 percent – but well off the +34 percent in March and better than the -17.5 percent in August 2020.

Bell also noted: “The gap between sentiment towards the ‘general economy vs own business’ highlights the uncertainty but suggests businesses have some confidence in managing their own situation.”

“Eighty six percent indicate a negative impact of the lockdown on their businesses, with less than half saying the impact is major.  More than 11 percent are expecting a positive impact.  60 percent are making changes in response to the lockdown and 22 percent say those changes are major.”

Bell added: “Waikato businesses have recovered strongly since the first lockdown, with growth bolstered by the Auckland-based businesses and workforce relocating to  Waikato to take advantage of more affordable housing, better education and the lifestyle that the region offers.

“That relocation shift is accelerating, offering a beacon of light for the Waikato
economy.”

When asked about the challenges facing business, companies are focused on staffing, supply chain and ongoing uncertainty; with smaller businesses emphasising loss of customers and cashflow.

“Concerns around staffing and supply chain are palpable,” noted Bell, adding: “Despite significant growth, businesses are struggling to find staff; and supply chain constraints are causing major delays and massive cost increases, resulting in margin and cashflow pressures for business.”

He added: “Small businesses could be hit the hardest by this lockdown.  Without the buffer that bigger businesses can maintain, the management cashflow is likely to become a growing issue.”

“Seventy eight percent of those surveyed indicated that they have or expect to apply for wage subsidies.

“When asked about other support required, a third require support with business strategy, marketing and business continuity planning respectively.

“Surprisingly, only 21 percent need help with HR – low given the tight labour market.  A quarter require support with digital enablement – surprising given the lessons of 2020 – though this links well to the Government’s Digital Boost programme.

“Digitisation of businesses is accelerating and will be critical in lifting productivity,” added Bell.

“Waikato is well placed to take advantage of the move towards online purchasing with the development of integrated distribution hubs at Ruakura and Tokoroa linking the Port of Tauranga and Auckland – attracting a myriad of manufacturers and distribution centres to Waikato.”

The survey had responses from 504 businesses across a wide range of sectors.

A third of those surveyed had revenues of <$1m and 75 percent had <10 employees, 12 percent had revenue >$10m and 13 percent had >20 employees.

Two thirds were located in the centre of the region (Hamilton, Waipā, Waikato District), a quarter were from the east (Thames Coromandel, Matamata-Piako, Hauraki); and the rest were from the Southern part of the region (Taupo, Ōtorohanga, South Waikato, Waitomo).

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