Employment dispute in Christchurch where a business faced consequences for dismissing an employee before their start date, resulting in an $18.5K payout.
Published 11 October 2022 | 2 min read
In this article by Tom Pullar-Strecker, he shares data on the economic outlook of businesses and how the perception of the economic downfall is changing among business owners.
Businesses have shed some of their pessimism about the economic outlook but still remain downbeat about the future, according to a survey conducted by the New Zealand Institute of Economic Research.
The think-tank’s quarterly latest survey of business opinion found a net 42% of businesses surveyed in the September quarter expected the economy to deteriorate in the coming months.
That compared with a massive 62% expecting darker times ahead when it previously conducted its survey in the June quarter.
NZIER said businesses were starting to see the light at the end of the tunnel.
A net 3% of firms reported an increase in their own trading activity during the September quarter.
Demand appeared to be stabilising at a lower level, suggesting a period of weaker growth ahead, NZIER said.
The Reserve Bank is almost universally expected to raise the official cash rate by 50 basis points to 3.5% on Wednesday.
But NZIER said there seemed to be some signs capacity pressures in the economy were easing, with a net 9% of businesses reporting capacity as the primary constraint on their business, compared to 13% in the previous quarter.
Finding workers remained the main constraint for businesses, with the proportion of business reporting that as their key constraint rising from 37% to 43%.
“However, shortages for both skilled and unskilled labour are easing from the historically high levels of the past year,” NZIER said.
“This suggests wage growth is likely to ease over the coming year, as the reopening of international borders allows more firms to employ workers from overseas.”
Those developments were moderating inflation pressures, it said.
“In the September quarter, the proportions of businesses reporting higher costs and raising prices both fell.”
NZIER said that although the economic outlook was “highly uncertain”, the survey results supported its view that annual inflation would ease over the coming year.
“Businesses are still cautious about investing in buildings and plant and machinery for the coming year, with a net 17% and a net 2%, respectively, intending to reduce investment in these areas.”
Retailers were the most downbeat, it said.
ANZ economist Miles Workman said the data on capacity and inflation pressures would be most important for the Reserve Bank and “should still be making them very uneasy”.
The bank has been relatively hawkish compared to its peers on the interest-rate outlook and said “cost and pricing intentions remain far too high”.
“Capacity constraints easing at a snail’s pace isn’t enough to get core inflation back to an acceptable level in an appropriate timeframe,” Workman said.
”We expect another 50bp hike tomorrow and see the OCR reaching 4.75% by mid-2023, provided the wheels don’t completely fall off the global economy.”
Click here to read the article by Stuff.co.nz.