Confidence has rebounded but key priorities are unchanged: Health, Inflation, Crime, Education & Housing
Our November 2023 sentiment survey reflects a Waikato business community whose confidence has rebounded with the election of a new government. However, concerns about the delivery of core government services remain high and political uncertainty is seen as a key barrier to growth. Waikato businesses continue to prioritise roading as the most needed infrastructure investment in the region, and there has been a strong increase in those citing renewable energy infrastructure as a priority, reflecting the key role renewable energy needs to play in enabling the Waikato’s transition to a low emissions economy.
Key insights
- Respondents’ net confidence in their own business has lifted back to November 2022 levels, with a net score of +9, up from -13 in April 2023. Of those surveyed, 45% are extremely (9%) or fairly (36%) confident about their business prospects over the next year, compared to 35% being fairly (29%) or extremely (2%) worried. Views on the outlook for the Waikato region and national economy have also improved significantly, from net negative to net positive outlooks.
- Pressure on business profitability has eased and profit expectations are stronger, with 46% of businesses expecting a profit increase in the coming 12 months (compared to 34% in Apr-23). Growth expectations have also lifted, with 54% of businesses planning for growth in the next 12 months (compared to 45% in Apr-23).
- Labour market pressures are easing – fewer businesses believe there is a skills shortage (69% down from 78%).
- Views on key challenges facing the New Zealand economy and priorities for the government are largely unchanged from the previous survey. The top five priorities are: Health, Inflation/Cost of Living, Crime, Education, and Housing Affordability.
- Top regional infrastructure concerns remain roading (60%), health infrastructure (54%) and affordable housing (41%), however, renewable energy has grown in importance to #4 on the infrastructure priority list (22%, up from 11% in April).
- There has been a considerable increase in the percentage of Waikato businesses with a climate change policy/strategy in place, up from 24% to 44%. However, over 40% of Waikato businesses are not actively considering the risks of climate change on their business and have no plans to develop strategies to respond.
- At a sector level, the results indicate clear pressure on the Agriculture/Forestry/Fishing and Construction industries, however, their outlook for the coming 12 months is more positive, particularly for Construction. The Info/Media/ Telco sector has shown strong performance for the past 12 months, but has one of the most negative sector outlooks for the coming 12 months and continues to highlight skills shortages as a major challenge.
- At a district level, sentiment and performance was strongest for businesses in the Taupō, Waikato and Ōtorohanga districts, and weakest for those in the Thames-Coromandel and Matamata-Piako districts. This reflects the ongoing impact of cyclone recovery on businesses in Thames-Coromandel and the prevalence of primary industry businesses in Matamata-Piako.
- The survey results indicate generally strong performance and positive outlooks from Māori and Pasifika businesses in the region, with Pasifika businesses rating particularly strongly for revenue and profitability.
What this means for the Waikato:
The resilience of Waikato businesses to economic challenges shows strongly in the November 2023 survey. They continue to back themselves to grow or at least maintain their position, and are positive about the future outlook for their own business, the Waikato region, and the New Zealand economy. They are increasingly planning for the impact of climate change and are clear on the key infrastructure needed in the region to enable their growth.
As the new Government establishes itself and focuses on delivery of its 100 day plan, the Waikato business community will be watching closely to see that their concerns about the delivery of core government services will be addressed and that investment is prioritised towards key growth enabling infrastructure.
Read the full Waikato Business Sentiment Survey Report here.
