8 Oct 2012

Smaller companies expect profit reduction

1:43 pm on 8 October 2012

Smaller firms expect a fall in profit in the year ahead as demand remains tepid.

ANZ New Zealand's latest Business Micro Scope quarterly report shows pessimists outnumber optimists, with a net 1% of firms with 20 or fewer staff expecting reduced profitability.

A net 14% of firms are optimistic about the country's economic prospects over the next year, down 7 points compared with the previous survey.

Fewer firms are upbeat about their own prospects, with one in four citing low turnover being their biggest problem, while expectations about profitability and investment intentions also dipped.

But there's been one bright spot, with hiring plans rising for the first time in a year.

The manufacturing sector recorded the highest level of confidence, while sentiment among farmers fell to its lowest level in three years.

Sentiment among smaller firms stands in contrast to their larger counterparts, which recorded a jump in confidence about the coming year.