18 Apr 2024

Business performance sentiment hits record low

9:00 am on 18 April 2024
23062016 Photo: RNZ / Rebekah Parsons-King. Busy streets in Wellington.

Retail business leaders were considerably less positive about their business performance. Photo: RNZ / Rebekah Parsons-King

Business performance sentiment is at a record low as a positive post-election glow gives way to a gloomy economic outlook.

The latest biannual BDO Business Wellbeing Index, which included responses from more than 650 business leaders over the past two weeks, shows just 53 percent feel positive about their business performance, compared with the post-election's 61 percent.

Just 41 percent of business leaders were feeling positive about their finances in the past two weeks, with only 27 percent feeling positive about economic factors all or most of the time.

Most were feeling challenged by current market conditions.

"When we undertook our last survey in the two weeks immediately following the election, business performance sentiment and business leader wellbeing were uplifted," BDO advisory partner Kimberley Symon said.

"This likely reflected a sense of hope and excitement among business leaders about the economic changes that a new government can bring - however, there is now potentially a realisation that change will not happen overnight."

Symon said the latest report was awash with low-scoring sentiment, with just 36 percent of business leaders positive about their cash flow, political factors (40 percent feeling positive), financial performance (41 percent feeling positive) and workload (41 percent feeling positive).

Rural sector business leaders were more positive on a whole, while the rest were struggling with economic pressures and financial concern.

The survey found agribusiness leaders were feeling more positive about their current business performance than they were in October 2023, perhaps led by improving dairy prices.

However, retail and tourism business leaders were considerably less positive about their business performance amid weakening consumer demand and increased costs.

In the six months following the October election, the percentage of leaders saying that business financials have been driving negative wellbeing had ballooned to 63 percent from 49 percent.

Symon said political factors were still a concern but the May budget may help improve how business leaders are feeling about the current environment.

"Business performance is also clearly a standout concern, as well as workload issues. I think our business leaders are feeling really stressed and have a lot on their plate."

Business financials remained the leading driver of negative wellbeing, followed by economic pressures - also significantly increasing to 47 percent from 31 percent post-election.

She said the report suggests leaders were taking active steps to protect their mental health.

Future expectations more positive

Business leaders were typically more optimistic about their future business performance than their current outlook, with 60 percent more positive when looking six months ahead, compared with just 53 percent in the shorter-term.

While economic conditions were a large concern, business leaders were also grappling with new technologies and artificial intelligence.

Just 46 percent felt positive about the adoption of new technologies, which was one of the lowest-scoring business performance attributes and suggested leaders may still be getting their heads around how to effectively leverage AI in their organisations.

However, 55 percent expected to feel more positive about technology in six months time.