Business confidence soars


Friday, 29 July, 2016

Finally, some good news. Australian business confidence has jumped to the highest level in over five years, according to the latest Sensis Business Index (SBI) survey.

According to Sensis CEO John Allan, “While sales and employment improved and prices remain positive, wages and profitability went backwards this quarter. These are not the results you would expect to see when confidence has lifted to a five-year high.

“Rather than being driven by these indicators, confidence is instead being driven by perceptions that the overall economic environment is improving. On top of this, the non-cyclical influences remain strong, with businesses continuing to feel particularly positive about their own specific business strengths,” he said.

The net balance score of +44 — the difference between the number of confident SMBs (60%) versus the number of worried SMBs (16%) — is the highest business confidence score recorded since March 2011. The index, which reflects the views of 1000 small and medium businesses from across Australia, also found that perceptions of the economy improved by 14 points this quarter, although they remain negative overall on -8.

“Perceptions of the economy have been negative for some time and, while they remain negative, they have improved to the best level we’ve seen in two years ,” said Allan.

“Concern about the economic environment has halved, with only one in 20 businesses now worried, while the number of businesses reporting a lack of work or sales as a barrier to taking on new staff fell from 51% to 38% — the lowest level we’ve seen since September 2014,” he said.

“Metropolitan businesses are feeling more confident on all of the key performance indicators and, with the exception of NSW, now also lead their regional counterparts in terms of business confidence in every state and territory,” said Allan.

“While most sectors are feeling confident, manufacturers saw weak sales and demand, while retailers continue to worry about business conditions. These two industries are the least confident and are reporting more challenges than the other sectors.”

The survey found that businesses’ perceptions of the federal government in the lead-up to the election were mixed, with 21% supporting the policies of the Coalition Government and 19% opposed, while the majority remained indifferent. In terms of the perceptions of state and territory governments, only the NSW Government now has a positive rating, with all except for the NSW and NT governments going backwards this quarter.

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