How are Canterbury businesses faring right now?

Every three months we run the Quarterly Canterbury Business Survey, which gathers insights from the wider business community about their confidence in the economy, their own performance, and what their expectations are looking forward for things like investment in plant and equipment, and bringing on more staff. We also ask businesses what barriers they face which are getting in the way of doing those things.

At The Chamber we believe that without strong businesses, we don’t have strong communities. It is important that businesses are confident to grow, leading to improved community outcomes with more employment, and better opportunities and prospects for our region’s people.

Over the last year that we have been doing the survey – results have broadly told the same story. Businesses in Canterbury are optimistic about their own earnings, but remain concerned about the direction of the economy in general.

This concern about the economy is generally born from barriers to growth and productivity facing businesses like labour market constraints and immigration settings, inflationary pressure and rising interest rates, and falling consumer demand.

What has changed recently though, is the growing concern about rising costs. Where labour market constraints had previously been the biggest concern for businesses – as they struggled to find the staff to meet demand post-COVID – they are now increasingly concerned about the growing increase in costs, which seem to be piling on from all directions.

The concern about inflation and rising interest rates may seem obvious as they are the same costs you are facing at home – but when we combine those costs with what businesses tell us is a barrage of additional costs including compliance burden – the result is businesses are less confident.

An example of how business confidence plays out in our local economy is the significant gap forming between SMEs expectations of investment in their businesses and growing staff numbers compared to larger businesses.

There are more than 40,000 SMEs in Canterbury, who are often more exposed to these cost pressures – and we can see this coming through in the data from our survey.

We estimate that SMEs are dealing with $1500 per month in extra overheads like rent and insurance, but what is even more concerning is that about $240 of that is from increases in compliance costs. For many small businesses they are simply not able to absorb these costs so they either pass these onto their consumers and customers or they must make some really tough decisions on operating expenses and in some cases their ability to trade.

So, what is the solution? Just like in households, for businesses to be confident and invest they need to operate in an environment where costs can be managed and predicted, and where there aren’t additional or counterproductive costs being added to the mix.

In our “Business Expectations of Government” election year report which has been put together with feedback and insights from our members across the Canterbury business community, we outline the settings we would expect to see from Government around compliance to reduce this burden and better enable our businesses to thrive. CT

Martz Witty WitzEndz Limited martz@witzendz.com