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Bay of Plenty Business News March/April 2018

From mid-2016 Bay of Plenty businesses have a new voice, Bay of Plenty Business News. This new publication reflects the region’s growth and importance as part of the wider central North Island economy.

From mid-2016 Bay of Plenty businesses have a new voice, Bay of Plenty Business News. This new publication reflects the region’s growth and importance as part of the wider central North Island economy.

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BAY OF PLENTY BUSINESS NEWS <strong>March</strong>/<strong>April</strong> <strong>2018</strong> 23<br />

Latest <strong>Business</strong> Monitor survey reflects<br />

reduced SME confidence<br />

Confidence in the economy has fallen to its lowest level in three<br />

years amongst New Zealand’s small-to-medium sized enterprises<br />

(SMEs), according to the latest MYOB <strong>Business</strong> Monitor survey <strong>of</strong><br />

more than 1,000 business operators around the country.<br />

By DAVID PORTER<br />

Expectations for the economy<br />

fell from an overall<br />

net positive 21 percent<br />

in the <strong>March</strong> 2017 Monitor,<br />

to a net negative 14 percent<br />

in the latest survey. This is<br />

despite businesses continuing<br />

to report strong levels <strong>of</strong> revenue<br />

growth over the last 12<br />

months and positive earnings<br />

expectations for the coming<br />

year.<br />

But Steven Farrant, chair<br />

<strong>of</strong> the Tauranga Chamber <strong>of</strong><br />

Commerce’s Small <strong>Business</strong><br />

Tauranga group, said he<br />

wouldn’t equate a drop in confidence<br />

to a risk.<br />

“As we know there has<br />

been significant change in the<br />

country recently, and change<br />

<strong>of</strong>ten creates uncertainty,<br />

which can lead to owners taking<br />

a more cautious approach<br />

to business,” he said.<br />

“Although SME owners<br />

and operators are very mindful<br />

and acutely aware <strong>of</strong> the economic<br />

climate, there is a danger<br />

that a pessimistic outlook<br />

isn’t healthy or helpful. As a<br />

result, from my experience,<br />

SME owners/operators focus<br />

their energy on the day job <strong>of</strong><br />

running their business.”<br />

The survey said businesses<br />

in the primary sector were most<br />

likely to predict the economy<br />

to decline, with over half <strong>of</strong> the<br />

operators in the industry (52<br />

percent) pessimistic about the<br />

coming year. Manufacturing<br />

and wholesale business operators<br />

were also concerned about<br />

a fall-<strong>of</strong>f in the economy, with<br />

41 percent expecting a decline.<br />

Construction and trades business<br />

operators are only slightly<br />

more optimistic, with 38 percent<br />

expecting the economy<br />

to decline, while 26 percent<br />

predict it will improve.<br />

However, despite expressing<br />

a significant level <strong>of</strong> concern<br />

over the future <strong>of</strong> the<br />

economy, 36 percent <strong>of</strong> businesses<br />

reported an improvement<br />

in revenue in the last<br />

12 months, the same level as<br />

2017. And there was only a<br />

slight decline from the highest<br />

level recorded in the Monitor<br />

survey in 2016 (37 percent).<br />

One fifth (20 percent) reported<br />

a fall in revenue levels in the<br />

last 12 months.<br />

Most business operators<br />

were also forecasting their revenue<br />

would improve or remain<br />

at current levels over the next<br />

12 months, with 38 percent<br />

expecting revenue to rise (the<br />

same proportion as in 2017)<br />

and 41 percent predicting their<br />

income will remain the same.<br />

MYOB general manager<br />

Carolyn Luey said that<br />

while businesses were right to<br />

express some caution, as the<br />

international situation in particular<br />

is increasingly uncertain,<br />

there was a risk that the<br />

growing levels <strong>of</strong> pessimism<br />

could affect the economy.<br />

“The report … points<br />

out the underlying<br />

performance and<br />

revenue expectations<br />

within the SME sector<br />

remain strong.”<br />

– Steven Farrant<br />

“The fundamentals <strong>of</strong> the<br />

SME economy at present are<br />

strong – businesses in general<br />

are doing very well, and<br />

most expect that performance<br />

to continue over the next 12<br />

months,” she said.<br />

Steven Farrant: Change can<br />

create uncertainty. Photo/Supplied<br />

“While there are some areas<br />

to watch – such as the decline<br />

in manufacturing sector earnings<br />

and lower levels <strong>of</strong> revenue<br />

growth for the primary<br />

sector – the overall sector is in<br />

good shape.”<br />

Luey said the level <strong>of</strong><br />

uncertainty around the policies<br />

and direction <strong>of</strong> the new government<br />

had been well canvassed<br />

in recent surveys.<br />

“But other concerns, such<br />

as a looming international trade<br />

war, global instability and, closer<br />

to home, the range <strong>of</strong> new<br />

taxes being mooted by the tax<br />

working group – all <strong>of</strong> which<br />

were covered during the survey<br />

period – are likely to be factoring<br />

into how well business operators<br />

believe the New Zealand<br />

economy will perform.”<br />

Small <strong>Business</strong> Taranga’s<br />

Farrant said it was worth<br />

noting that SMEs could and<br />

did adjust and adapt to market<br />

changes quickly and <strong>of</strong>ten<br />

effectively.<br />

“The report also points out<br />

the underlying performance<br />

and revenue expectations<br />

within the SME sector remain<br />

strong,” he said. “I believe<br />

the survey reflects a period <strong>of</strong><br />

change and the air <strong>of</strong> caution<br />

that brings, but I expect our<br />

sector to continue to perform<br />

well over the next 12 months.”<br />

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Agri<strong>Business</strong><strong>News</strong><br />

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