Date: 18th April 2011
Business confidence vs. consumer confidence
‘Consumer confidence’ is an economic indication of how optimistic consumers feel about the economy and their own financial situation and their saving and spending activity. It basically means that if people feel financially stable at work and home, they tend to spend more.
‘Business Confidence’ measures how businesses feel about their financial state. Business confidence in New Zealand generally refers to the results of the monthly Business Outlook Survey put together by the National Bank of New Zealand, which surveys 1500 businesses nationwide. The survey asks questions about the business’ opinions on what will be happening in the 12 months in areas like interest rates, unemployment, investments and exporting. These questions give a fairly accurate gauge on business mood and feelings on the business climate.
As you can easily imagine these two surveys can offer some clues for you in your business but probably best taken with a grain of salt to ward off self-perpetuating outcomes. However, consumer confidence can help you decide whether to keep high-value items in stock, outlay cash in advance or take risks with a new product of service. Decreasing consumer confidence may have you treading carefully about decisions, expenditure and risk.
We certainly know that recent physical events and national disasters had a huge impact on the psyche of the country. Business owners and consumers confidence has been somewhat wibbly wobbly and the outcome has been a fifty-fifty approach to both one of caution and the other half ‘carpe diem’ – let’s get on with things type attitude!
As usual, your best tools are a practical approach and a good business advisor.
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