The results of our latest MYOB Business Monitor are out and the findings point to a “two-speed” economy. Auckland has begun to show signs of sustained growth, while the rest of New Zealand struggles amidst poor performance from major sectors and a stalled recovery outside the main centres.
In Auckland, the results were very encouraging, as the region recorded back-to-back quarters of net positive revenue growth for the first time since the recession began. A net 11% of Auckland businesses reported an increase in revenue over the last 12 months – up from 7% in March and a definite improvement on a net 7% fall in revenue in September 2011.
What is especially positive about these results is the big role that sole traders have played in the region’s growth. Sole traders, who make up the bulk of Auckland’s businesses, reported a net 15% increase in revenue over the last 12 months.
With sole traders also being the majority of businesses right throughout the country, these results suggest they will be a key part of a long-term recovery.
To see our major trading hub performing so well is very good news. Auckland has long been the quiet performer in these surveys, and a return to growth for our largest city would normally be a real sign of a wider economic recovery.
Across the rest of the country the results were less positive. Economic activity in Christchurch is still showing the effects of the earthquakes and a slow start to the rebuild, while the rest of New Zealand struggled to find many bright spots in a sluggish regional recovery.
However, the cities will be providing more encouraging news in the year ahead. Auckland will continue its trend back to growth, with a net 36% of Auckland businesses expecting their earnings to increase in the next 12 months. In Christchurch, businesses are predicting the massive rebuild investment will start to have a more significant impact on the local economy, with a net 33% of businesses expecting revenues to improve. And while Wellington won’t have as stellar a quarter as the previous one, a net 25% of businesses in the Capital are still expecting growth.
The regions are predicting more modest growth, with a net 8% of businesses outside the main centres expecting to earn more in the coming year – downgraded from a net 25% expecting annual revenue growth in the April MYOB Business Monitor.
With 46% of all businesses being based in the regions, the key challenge for the economy will be to ensure the positive momentum building in the cities can lead to more economic stimulus for businesses right across the country.