South Island bosses are both more optimistic and more generous than their North Island counterparts, according to the latest Grant Thornton’s International Business Report (IBR).

The survey, undertaken during the first quarter of this year, showed 21% of South Island employers were looking to increase salaries by more than inflation in 2014 compared with only 13% of those in the North Island. North Island bosses were also looking to holding present rates with 15% not expecting to increase salaries this year compared with 12% in the South Island.

Paul Kane, Partner, Privately Held Business at Grant Thornton New Zealand, said that the report demonstrated the buoyancy of the South Island with 40% of businesses being very optimistic about the year ahead compared with 30% for the North Island.

“Nearly half of the businesses in the South Island expect to hire more people in 2014 (46%) compared with 31% for the North Island, almost identical figures to what actually happened in 2013,” he said.

Kane said that there were several other aspects of the report that demonstrated the strength of the South Island economy.

“Three-quarters of South Island businesses expect greater profitability this year compared with 64% of those in the North Island, while 29% of South Island businesses (North Island 19%) expect to invest in new buildings and 56% (South Island) and 51% (North Island) looking to invest in plant and machinery.

“This buoyancy is definitely putting a strain on the availability of skilled workers in the South Island with 21% being very pessimistic about attracting suitable staff compared with 8% for the North Island.

“The Canterbury rebuild is a definite factor in this buoyancy. While there is plenty of investment being put into infrastructure in the North Island and the Auckland housing construction, it probably doesn’t match what is happening in Christchurch. As for everything else, especially agriculture, the picture is been pretty rosy for both islands.

“The country has had favourable economic conditions for some time with record low interest rates and dormant inflation, but we are probably about to enter a new cycle with interest rates starting to creep up and inflation getting stronger. In the short term it should have little effect on the confidence levels of New Zealand businesses, but if interest rates, in particular, start to accelerate, then we might see a softening in confidence and the gap closing between the two islands,” he said.

Further enquiries, please contact:

Paul Kane
Grant Thornton New Zealand Partner, Privately Held Business
D +64 9 308 2576
T +64 9 308 2570
E paul.kane@nz.gt.com