Confidence falls with most companies warning of falling profit and investment plans
Business confidence continues to fall, with the first signs that pessimism causing businesses to cut back investment plans.The quarterly survey of business opinion (QSBO), New Zealand’s leading survey of its type, found that a net 19 per cent of businesses expect the economy to deteriorate in the coming year. Three months ago the survey found a net 10 per cent were pessimistic.
The scores in the survey subtract the number of respondents which are negative from those which are positive, meaning pessimists currently strongly outnumber optimists.
Christina Leung, principal economist at the Institute of Economic Research (NZIER), said this was the weakest outlook since March 2011.
The NZIER report show business confidence has plummeted to the level of a man with a small penis at a public urinal. Timid, nervous and quietly trying to piss in their own corner – who knew the mighty Captains of NZ Industry were the true snowflakes and all it took was fair wages, decent working conditions and a woman in charge to destroy their confidence!
There are 3 real reasons why business confidence in NZ is plummeting.
1: Echo Chambers
Remember when right wing fixer Jordan Williams bet that he would walk down the main street of Wellington naked if Winston didn’t go with National? This false certainty was an example of how highly polarised NZ is now as a culture, with few broad platform media outlets able to give a wide enough perspective of what is really happening. We have mistaken a small population for a connected one.
The reason business are reeling was because they honestly believed their own echo chambers and didn’t think Labour, the Greens or NZ First could get to 51%. They have no real excuse for this level of ignorance because the moment the election result came in, it was always abundantly clear to anyone who had actually read NZ First’s policy platform that Winston was always going with Labour. Also, any basic understanding of the special votes always concluded Labour & the Greens were the ones who would pick up numbers.
So the first reason why business confidence has been shaken is because they were genuinely blindsided by the result, and a spooked business community loses confidence.
2: Wilful Spite
The second reason why NZ Business confidence is plummeting is pure ideological spite. There are rich elements within NZ who despise the Left with the kind of hatred of communism that McCarthy would feel embarrassed expressing in public. They are the same forces who triumphed over Helen Clark during the Winter of Discontent when the same elites forced Helen to dump closing the gaps policy.
Remember, there was no real reason at all to force Clark’s Labour Government to dump the closing the gaps policy, it was a pure domination move to let the Labour Government know the business elites, not Helen’s Government, were the ones in charge.
Brutally strangling social justice policy aimed at lifting Māori out of the depths of poverty meant Labour wouldn’t dare tamper with the neoliberal settings of the economy.
Those same forces are at work in purposely spiking business confidence now. This is why Grant Robertson has been so fastidious in keeping the spending promises in place, despite the grotesque underfunding of the last 9 years under National. Any opportunity to attack will be seized upon by these elites and the new Government are doing everything in their power to limit those targets.
The truth is that this most malicious element within the business community won’t be sated by anything other than the total destruction of everything Jacinda represents.
The Government should quietly note those who are causing the most venom and with cold blooded precision, nail those captains of Industry with specific taxes or expensive regulation. For these players of the game, there can only be a ruthless response, because you can’t negotiate with cancer.
3: Correct analysis of the looming meltdown
Of course the third reason why NZ Business confidence is tanking is because they are correctly reading the external economic signs of the impending reckoning.
Central banks around the world responded to the Global Financial Recession by printing billions and pumping them into stocks and bonds. This falsely created the lowest inflation rate in 5000 years. The entire last decade of growth has been built on hope wrapped in snot. When the collapse comes, it will have the force of a possible depression…
Comment: World at risk of a borrowing hangover
World debt ratios have spiralled to record levels during the era of super-easy money and markets are showing telltale signs of late-cycle excess, leaving the international financial system acutely vulnerable to a jump in borrowing costs.Any reversal in our fortunes could be “quick and sharp”, says the Bank for International Settlements, the global watchdog based in Switzerland and the scourge of dissolute practice.
The warnings cascade from the BIS’s annual report released over the weekend, always a sobering read for investors and central bankers alike.
Europe’s ‘death wish’ has never been stronger
Emmanuel Macron’s “grand plan” to relaunch the euro on safer foundations lies in tatters after Europe’s northern bloc refused to contemplate any form of fiscal union, and exhausted leaders kicked the crucial issues into touch.After battling deep into the night over migration there was no energy left at the Brussels summit for a fight over fiscal architecture.
The paralysis means that Europe is likely to stumble into the next global economic downturn disastrously ill-equipped. It will have no shared fiscal instruments of any scale to fight recession, leaving the weakest states vulnerable to collapse.
Could New Zealand’s economy survive a China crisis?
In July 2018 China’s economy falters sending shockwaves through the global banking sector. Commodity prices plunge and the world faces its first global financial crisis since the meltdown of 2008.What happens next is pretty ugly for most New Zealanders – job losses, soaring mortgage rates, falling house prices and a sharp recession.
As a forecast it would be unnecessarily gloomy, although not implausible.
But the grim situation painted by NZ Treasury is not meant to be a prediction – it is a model designed to offer a stress test of our economy under extreme conditions.
A Chinese financial crisis is one of three “large but plausible shocks” modelled by Treasury in its 2018 Investment Statement, along with a major Wellington earthquake and an outbreak of foot and mouth disease.
…so those are the three forces feeding into our falling business confidence. Ignorance of the wider electorate, wilful idealogical spite and a sober reading of the economic indicators warning of a meltdown.
That’s a potent cocktail of grief right there.
Based on the low threshold of fear that it takes for business confidence to dry up in NZ – things like eclipses, women voting and Maori with PHDs would have to be banned for NZ Business to feel confident.
… ” The Government should quietly note those who are causing the most venom and with cold blooded precision, nail those captains of Industry with specific taxes or expensive regulation. For these players of the game, there can only be a ruthless response, because you can’t negotiate with cancer ” …
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I like this bit.
Those same cancers who create the conditions here and overseas are the same ones who bring on their own demise… why should we be concerned with them?
They have no answers, just more oppression.
They bring no benefits, just enslavement.
Do we really need them?
If not , – why do we listen to them?
And if we shouldn’t listen to them, – why should the government?
Therefore , perhaps it is time for the government which we elected to start to put these types squarely in their place and give them a less than subtle hint that they are not the ones in charge – the government is.
And they can cry and stamp their feet and hold their breath for as long as they like but that is democracy. Its also what the people wanted. And the people did not want a govt dictated to by vested interest groups that disadvantages the majority.
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… ” We don’t like extremists, – we believe in laws and policy’s that support the mass majority of New Zealanders , and not just a small elite ,… who may have gotten control of the political system and the financial funding of political party’s , … shows that in this campaign ” …
– Winston Peters.
23/9/2017.
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If we were a rational community people who are in business would be barred from voting and other big-picture decision making. To be in business requires a big focus on money – otherwise you don’t last very long. People are either motivated by greed or fear of financial failure – or maybe both. In any case the distortion this creates when thinking about public-good is huge.
If you own a business it’s almost impossible not to think first about your money when considering any issue – especially when you’re coming from a place of fear. While Big Business causes the biggest problems in our world I’ve found a lot of small business people to be so short sighted that they often undermine their own business with their decision making.
As a society we should look on business people as being a special case of person who, while doing an important job, shouldn’t be taken very seriously when discussing non-business issues. Clearly this is a non democratic viewpoint but I think it’s a worthwhile thought experiment to conduct.
And for anyone looking to slam me for not knowing anything about business, I’ve worked for other companies, run my own business, done volunteer work and worked for non-profit organisations so I’ve seen this problem from all sides.
“being a special case of person who, while doing an important job, shouldn’t be taken very seriously when discussing non-business issues.”
So many cannot see that under-trained and underpaid employees, plus an excess of unemployed – mean a serious drop in paying customers.
Every lay-off, every downsizing – goodbye buyers. Farewell positive cashflow.
We do not have an infinite quantity of middle-class well-paid people. The ways they’re being ripped off and rorted is truly stunning. Do businesses think there are more fish available?
Not immigrants. Not Kiwis returning home. They’ve seen the galling truth of low-quality and over-priced.
Instead of bleats about ‘business confidence’ – perhaps the reporters could be very very explicit. Which businesses? And what exactly is denting their hopes? And what positive resposes have they got? Then we’ll have information instead of woo-woo scaremongering.
You conveniently have omitted a few better reasons
Uncertainty that markets hate
Taxes rising that kills business and incentive
Broken and unrealistic oromises that makeNZ a laughing stock
Well I don’t know what ‘ oromises ‘ are but just a point or two.
( Joking, I do realize you meant promises 🙂 )
We could have a scaled taxation system , also , there are many ways businesses can write off, minimize , and reclaim losses. Workers cannot. Thusly and proportionately , businesses, – particularly big business – do not pay anywhere near their fair share of taxation.
Smaller businesses are a little different. But anyone with half a brain could work out a sliding scale that did not excessively punish them by being too punitive. The idea is not to discourage but to encourage prosperity , – but not at the expense of the many for the sake of the few.
yes we are already being set-up to fail as we saw the holes in the National Government books when they had not funded all the policies they had instituted in their last nine years.
They just cut the funding of all upgrading and maintainence of all assets in public ownership before they intanded to flog them of at fire sale prices to their mates.
“Central banks around the world responded to the Global Financial Recession by printing billions and pumping them into stocks and bonds. This falsely created the lowest inflation rate in 5000 years. The entire last decade of growth has been built on hope wrapped in snot. When the collapse comes, it will have the force of a possible depression…”
What good is market pricing that indicates scarcity when the polar ice caps have already melted.
And tax cuts also kills research & development so we see in hospitality where bankruptcy by industry is highest the trigger point seems to be 3% so any restaurant who puts in less than 3 cents of every dollar in researching a new menu goes bankrupt with in 6 months. While pharmaceutical who spend over 97% of every dollar earnt goes bankrupt as well. And you can read Doughnut economics by Kate Raworth for more on this, if you wish.
And I would say that NZX board, The Chiefs of The Defence Forces and so on would fundamentally disagree with any one claiming New Zealand is a laughing stock. It was said that New Zealand stance on Russia gate and the poisoning of the Skripples family had made New Zealand into a laughing stock because some very disagreeable people demanded to see the evidence for some imperical claims vomited up by the wonderful Boris Johnson and distributed by payed to play commercial media cartels.
So yeah, it’s difficult to see how this warped sense of reality can be maintained and I wonder how long it will last before commercial media skills it or kills themselves. And I’m talking about the closure of media institutions like TVNZ, TV3, The Herald, 1ZB and so on.
Employees must embrace uncertainty and change or sling their hooks.
“Business” in NZ encounters change and has a meltdown.
The truth is their business model is based on cheap labour and poor working conditions. Hardly the model for growth and innovation!
Rubbish we have the lowest taxes in the Western World.
many of the business people only care about profit and it has to rise it cant stay the same like many people pay packets
people don’t like uncertainty either whether they have a job or work today or tomorrow how many hours they get, can they pay their rent and what will they eat, no pay increase and rising living cost = depression, anxiety and stress
Government saying better and more efficient public services yet many services cut, reduced transport options no buses to get to work in early am shifts cause they don’t run at his time, need a car cannot afford one wages not going up but cost of living rising daily, will I have enough hours of paid work to get by, how can I pay my rent or mortgage. I think everything you said can be turned around dR alan paper t, you need to stand in someones elses shoes
Good article here with Mainfreight in support of the governments direction.
https://www.noted.co.nz/currently/politics/mainfreight-business-support-for-the-government/
Apparently the Warehouse is making store staff reapply for their jobs, no loyalty, no care, absolutely no guarantees they will get their jobs back, much less being on their pitiful current conditions as they are. Just treating staff like throw away commodities.
Maximising return to investors at least in the very short term whilst shitting all over your work force will see your businesses go south in the long term!
This is New Zealand under “business”, the working world stripped of protection for workers, few it appears in modern “business” NZ style gives a shit about their people, rather people they see as worthless disposables. The fools.
So I cease doing business with “business” like the Warehouse.
The warehouse have just introduced self serving checkouts like the supermarkets. I don’t use these unless I really have to. I prefer to be served by a person and I prefer people to have a job even if I have to pay a few more cents for each item and a few more dollars at the end of the week. I don’t shop at k mart cant stand the place I lived in Auz and didn’t shop there then and wont now. And I know some will say not everyone can afford a few more dollars well I lived on a benefit and learned how to cook cheap good budget food. I had 2 young brothers a sister and my daughter to feed on buggar all in 1990 during the mother of all budgets it can be done people need to do their homework.
“Grant Robertson has been fastidious in keeping the spending promises in place, despite the grotesque underfunding of the last 9 years under National …because any opportunity to attack will be seized upon by these elites and the new Government are doing everything in their power to limit those targets.” So we must do nothing to rock the boats?
On the other hand….. ” world debt ratios have spiralled to record levels …. leaving the international financial system acutely vulnerable to a jump in borrowing costs. What happens next is pretty ugly for most New Zealanders – job losses, soaring mortgage rates, falling house prices and a sharp recession.” So having done nothing to rock the boats, Grant Robertson awakes to find they have sunk? And who do you think will get the blame for that, Martyn? Oh, clever government!
Meanwhile, the S&P/NZX50 breaks 9,000 for the first time.
https://www.nzx.com/markets/indices
So the collapse in business confidence is nothing to do with the self-evident incompetence of the current government?
Really? 😉
Yep. Capitalism carries within it the seeds of its own destruction. Doesn’t need any help from government. Just sit back and enjoy the ride. I certainly will.
Andrew. And here I thought today would be unpleasant.
What evidence is that then?
And BTW wishful thinking is not evidence, in case you didn’t know.
There is good reason for Andrew’s suffering.
Winston is the all knowing sage don’t you know?
Tells everyone that we should expect a recession and then,
– Screws oil and gas exploration
– Wants to tax tourists
– Earmarks the dairy farming that they’re next in line
He’s his own self-fulfilling prophet.
Thank you BG for listing your grievances.
Allow me put your unfriendly mind at ease. New Zealand still and always has imported 100% of consumer petrochemicals from energy to plastics and fertilisers. And petrochemicals is likely to remain a strategic asset far beyond the feeble minds of oil execs and there apologists. There’re thousands of electric car charging stations around Australia and hundreds in New Zealand. Apologists can say all they like about petrochemicals because it holds no wieght.
How about the increase in confidence of all New Zealanders. The naked reality is that more people will spend because of this confidence which makes business profitable. And you believe the business community is intellectual? Given like you,they back right wing governments, I guess not.
Ask Mainfreight, or are they not a business? Really?
Same applies to farmers who lost their confidence the moment the new government was elected
Farmers like business, rely on consumers. Why is it business confidence goes up with a National government but consumer confidence goes down?
The answer is trust. Farmers and business trust that National will fulfill their end of the bargain, vote National and the financial benefits to farmers and business will follow. Consumers have little choice but to buy at inflated prices, the farmers and business will always benefit.
I dont know why. The government is being asked to pay out for mycoplasma so they will be getting money for nothing
I think there is an even simpler analogy here.
Business leaders see a glass that is half empty rather than one that is half full.
And in addition, they imagine they see cracks in the glass and they are expecting the glass to shatter.
AKA self-fulfilling prophesies.
All egged on by the treacherous Natzskis.
The idea is that only if the powerful man of the capitalist boardroom is happy that others (labour/people) are safe.
Security through appeasment of the power of capital.
Broken to the fist of the rule of the market, stay broken to it or feel its violent wrath.
The media will parrot this story the first year after the people elect a Labour led government from now (2000/2015/) to the end of the reign of international mammon – which has resulted in a greater divide between the haves and have nots than ever before (since the democratic era at least).
Thus the people and Labour led governments must be made to feel powerless to enact real change.
If businesses find their profits squeezed when the playing field heavily tilted in their favour is moved ever so slightly back towards level, then too bad.
Roger Douglas had no sympathy for the thousands of workers who lost their jobs when he moved the goalposts on them in the name of so-called sustainability.
I don’t recall the captains of industry crying out in sympathy for those affected back then.
What’s sauce for the goose………….
The Pain B4 the Gain – Roger Douglas on Neoliberalism 1984 ?
This is all pointing to a need to change the basic way the economy works. The reality is if a few can capture and then manipulate markets at will, as the business class has and does. Then we need to fundamentally change how we organise how things are done. One small group in society should not walk us all over the cliff.
I wish we had all the above contributors except Andrew running our country. So much understanding, knowledge and empathy. Great reading all of you, and Martyn awesome as usual!
Lack of Confidence is due to the lack of ability in NZ Business Community?
Bang. You hit the nail right on the head Jack. They either inheritors or owners of one only process and not enough brains to go out and find another one
well put and accurate Martyn, simple as that!
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