13 July, 2016
Westpac: Small-Medium Businesses see revenue and job growth ahead
Small to medium size businesses (SMEs) feel positive about the economy, are intending to create new jobs and looking to borrow to grow their business according to the findings of the latest quarterly *Westpac Business Growth Monitor.
Of the 500 SMEs surveyed online between 1 April – 30 June, 43% believed the economy had grown over the last six months and 54% expect that to continue for the next six months. That confidence translated to 10% of SMEs creating new jobs over the last quarter, hitting 30% among medium size businesses (6+ employees). Meeting customer service demands was the main reason for hiring and that need is expected to continue with 17% expecting to hire new staff over the next six months and 23% expecting to hire over the next year.
Construction and tourism were the most confident with the primary sector and business services the least optimistic about employment growth. Construction also leads in revenue growth and expects that to continue (with 68% anticipating growth) with the primary sector the weakest (45% up from 38%), reflecting mixed commodity performance.
Westpac’s Head of Commercial and Agribusiness, Mark Steed, said the latest findings of the Business Growth Monitor showed a trend of growing confidence.
“Over the last nine months there has been a steady growth in confidence about the economy and in hiring. Since the last quarter of 2015, there has been a 5% lift in confidence in growing revenue and a 5% rise around the intention to hire staff over the next 12 months,” Mr Steed said.
“These businesses are central to the economy at a local and national level and it can only be good to see them planning for growth.”
Auckland was slightly ahead of the rest of New Zealand in confidence about the outlook over the next six months (51% vs 43%) and was significantly more confident about creating jobs over the same period (23% vs 14%) and the next 12 months (30% vs 19%). This, perhaps, a reflection of Auckland having more medium sized businesses.
Of those looking to grow, 63% had a plan to do so and 24% are looking to borrow to achieve growth. In line with growth aspirations being mainly with medium rather than small businesses, 20% of those surveyed are expecting to borrow between $31,000 - $50,000 and 23% are expecting to need $10,000 - $30,000. The main purpose for borrowing is to get better equipment (36%) or to buy an asset (23%).
On issues beyond New Zealand’s control that could impact the economy over the next year, there were reduced concerns around the Chinese economy and a lack of growth in the US economy. This was offset by a rise in concern about a lack of growth in the Australian economy and the NZ dollar devaluing, the latter being the No.1 concern. The on-going fallout from Brexit will be closely watched.
• The Westpac Business Growth Monitor measures the sentiment of 500 SMEs on the economy, jobs, hurdles to growth and outlook. It is an online survey conducted between 1 April – 30 June 2016.