Businesses brace for near-term challenges but expecting long-term improvement
The latest Mint Business Insights survey, conducted by independent economist Tony Alexander (pictured above), revealed growing concerns among Kiwi businesses from various sectors.
The top three concerns remain the overall economy, customer demand, and rising interest rates.
“The crushing effect of tight monetary policy is mentioned by many businesses,” Alexander said, emphasising the impact of financial conditions on decision-making.
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Price hikes on hold as labour market softens
The survey indicated that more businesses are holding back on price increases, with a record net 26% saying they do not intend to raise prices this year, compared to a net 22% planning increases last year.
“Thankfully, businesses are pulling back on raising their selling prices,” Alexander said.
Labour market conditions have also eased, with a net 24% of respondents saying it’s now easier to find skilled staff, reinforcing downward pressure on wage growth.
Cash flow struggles and spending cuts
Cash flow concerns are rising across multiple sectors, with businesses cutting back spending in key areas, particularly recruitment and expansion.
Areas of increased spending focus include strategy development and social media presence.
“Businesses are not in a mood to spend extra on plant and machinery,” Alexander said, indicating a cautious approach to investments in the near term.
Optimism for 2025 despite current challenges
Despite the tough environment, businesses are cautiously optimistic about the future, with hopes for improved revenues and staff morale in the coming year.
“The mantra ‘survive to ’25’ appears to be embraced,” Alexander said, capturing the resilient attitude among many respondents.
“Businesses are increasingly reacting to the depressed environment by pulling back on plans to raise their selling prices.”
Less concern for Kiwi dollar and cyber threats
Interestingly, concerns over the Kiwi dollar and cyber threats ranked low on the list of worries.
However, businesses have become slightly more concerned about the NZD being too low due to its recent weakness against the US dollar and Japanese yen.
Meanwhile, issues like climate change spending are taking a back seat to more immediate financial challenges, the report found.
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