Over half of small and medium businesses plan to increase prices in next 12 months

Small and medium sized businesses (SMEs) are feeling more upbeat about their own and the economy’s outlook, although a slight tone of pessimism still pervades amid cost increases.

The latest look at the sector by accounting software company MYOB showed a net 3 percent think the economy will get worse before it improves, which compared to last year’s 53 percent pessimism level.

MYOB general manager Emma Fawcett said sentiment was still having to contend with familiar headwinds.

“The cost-of-living, inflation and interest rates, followed by changes in consumer confidence or spending, and the cost of fuel and transport, are still top concerns impacting confidence.”

The next biggest concerns were around consumer confidence or spending, with more households facing higher interest rates as they rolled over their mortgages, as well as fuel and transport costs.

Fawcett said in addition to the regular issues were rising compliance and overhead costs.

Overall, 82 percent of SMEs said overhead costs increased in the past year, up $1490 per month on average, and for small firms with fewer than five staff compliance costs increased an average of $1067 per year, by an average of $2187 for businesses with 6-19 employees.

She said the flow on effect would be higher costs for consumers, with 54 percent of respondents planning to increase their prices in the next 12 months.

Most SMEs surveyed in the construction and trades, manufacturing and wholesale, and retail and hospitality sectors expected to raise their prices in the next year.

The construction and related trades sector was doing it toughest, with more than a third reporting lower revenue, although retail and hospitality firms were reporting higher revenue over the past year.

The number of firms reporting higher profits in the past quarter was 22 percent, nearly double the level of last year, but a growing number were reporting improved cashflow, and nearly two-thirds said they were in a good to excellent financial position, while most intended to keep staff levels unchanged.

“Another year of hard slog for local business owners has largely tempered expectations for the year ahead, but the green shoots some SMEs have seen over the past 12 months is likely contributing to some of the optimism … Overall, businesses are keen to keep momentum going as confidence rounds a corner,” Fawcett said.

According to the news on Radio New Zealand

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