MYOB: No danger of a double-dip recession

Despite signs of a slow and shaky recovery, New Zealand is not in danger of a double-dip recession, with over a third of businesses reporting more work or sales in the pipeline for the next three months, according to the August MYOB Business Monitor.

The figures are a reversal of the April Monitor, when 35% of Kiwi businesses reported a revenue decrease, compared to 26% whose revenue had increased.

MYOB general manager Julian Smith says although many businesses have been disappointed with the pace of the recovery, the financial performance data collected shows some  encouraging signs for the future.

According to the Monitor, 43% of all business owners expect their revenue to increase over the next 12 months, while only 10% expect a reduction in revenue.

Smith says the recovery is still unevenly spread through the economy, with larger businesses showing more pipeline work and higher expectations of increased revenue than micro  businesses (less than 5 staff) and sole traders.

"There is a feeling amongst many very small business owners that the recovery is something that is happening to other people and given the number of business owners in this group, this may be reflected in some of the confidence surveying," says Smith.

But with small and medium sized businesses, he believes there are some very strong revenue expectations on the back of improved economic performance which should drive growth.

Almost half (49%) of the medium sized businesses (20 - 199 staff) surveyed in the MYOB Monitor say they have more work or sales in the pipeline, with 43% of small businesses (5 - 19 staff) saying they have more work than usual in the next 3 months.

71% of medium sized business owners now expect revenue increases in the next 12 months.

Smith says in the current environment, business owners are still concerned about fundamental pressures on their performance.

"For the first time, cashflow is seen as the main pressure on doing business, with a third of business owners expecting to face cashflow issues in the next year, and a quarter expecting the timing of customer payments to be an issue," says Smith.

He also says price margins and profitability are key concerns which are particularly significant with the GST increase coming up on 1 October.

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