Christchurch Businesses Remain Optimistic Despite Economic Challenges

A recent survey by Business Canterbury, previously known as the Canterbury Employers Chamber of Commerce, reveals that 64% of businesses in the region are optimistic about the economy’s potential to strengthen. This sentiment persists even as the national economy experienced a more significant contraction than expected, shrinking by 0.9% in the June quarter. In contrast, a survey by ASB indicated that only 1% of investors anticipate improvements in the coming year.

Despite these economic pressures, a substantial 55% of businesses in Canterbury plan to increase their workforce. Additionally, nearly two-thirds of those surveyed intend to invest in property, plant, or equipment over the next twelve months. A remarkable 80% of respondents expressed confidence in their ability to manage disruptions, highlighting key concerns such as consumer confidence, demand, productivity, inflation, interest rates, compliance costs, and cash flow.

Leeann Watson, Chief Executive of Business Canterbury, noted that the survey was conducted prior to the announcement of national economic performance. However, she suggested the outcome might not have changed significantly. “Canterbury has been bucking the trend,” Watson stated. “While it is important to acknowledge that it is still tough for some businesses and individuals, the data certainly paints a much rosier picture and indicates we are heading in the right direction. The South Island is definitely outperforming the North Island.”

Watson emphasized that confidence metrics are just below long-term averages, indicating that businesses are preparing to invest for growth in the upcoming year. Agriculture-related businesses are thriving, benefiting from positive dairy and red meat prices, contributing to year-on-year growth in export trade. Manufacturers are adapting by exploring new markets and investing in robotics and technology, despite facing challenges from increased overseas tariffs.

The construction sector presents a mixed outlook. While some areas show potential, others are struggling after transitioning from long-term fixed contracts. An increase in university enrolments and the arrival of approximately 30,000 newcomers in Christchurch and wider Canterbury since 2018 are seen as positive indicators for regional economic performance.

“We don’t ride the booms and busts like other main centres, and right now that stability is our not-so-secret weapon,” Watson remarked. The creation of new businesses in Canterbury is occurring at twice the national rate, with regional GDP growth remaining slightly positive, unlike the national average of nearly 1% contraction.

Although retail and hospitality sectors continue to face challenges due to weak consumer demand, a shift is anticipated as approximately 60% of homeowners are set to come off fixed mortgages in the next quarter, which could increase their disposable income. The upcoming opening of a new stadium next year is expected to provide a boost for bars, restaurants, and retailers in the central city.

“I visited the central city yesterday, and it was bustling,” Watson noted. “I believe we are starting to see a corner turn. People are becoming more confident in the economy, so it’s just a matter of time.”

In the context of upcoming local elections, Business Canterbury is urging candidates to support innovation and continued business growth. Nearly 30% of businesses surveyed are large companies, while the remainder comprises small to medium enterprises. The findings align with ChristchurchNZ’s economic insights report for September, suggesting that a “not strong” local economy appears to be warming up.

Retail card spending has begun to show signs of recovery, and goods exported from Canterbury ports continue to demonstrate robust growth. Manufacturing and services activity is also moving back into expansion territory, indicating a thawing local labour market. While the report cautioned that monthly data could be volatile, the indications remain cautiously optimistic for sustained momentum in the local economy.