Small business confidence is up and growth expectations are rising, but the clincher may end up being a lack of skilled staff, according to ANZ's quarterly Business MicroScope survey.

New Zealand's business landscape is made up of more than 90% small businesses, so ANZ decided to use factors such as activity, employment, profitability and investment to gain survey responses. The survey says that 8% of respondents are confident about the business environment, up from 1% in March. Respondents cite investment intentions, profit and growth expectations as reasons for their positivity.

The survey found that Wellington and the South Island, outside of Canterbury, were leading the way in small business positivity, each with 19%, while Auckland follows with 16% and the rest of the North Island at 11%.

“Small business owners are telling us they're confident and ready to put their money where their mouth is by investing to grow their business,” said Andrew Webster, regional general manager Retail and Business Banking.

However, Webster says that although 27% expect to increase their activity over the next year, hiring skilled staff is holding small businesses back, with one in five respondents saying it is their biggest challenge. “Being able to recruit the skills they need is a key factor influencing whether businesses can meet demand in the market, yet nearly one in five small firms consider finding skilled employees as their main obstacle. Migration and training will remain to the fore in maintaining the national talent pool, while firms will more than ever need to build their strategies to attract and keep good staff who can help take their business forward,” Webster concludes.