Business confidence at its highest level in five years

Published at Jul 28, 2016, in Features

With a new government now in place, Australian business confidence has lifted to its highest level in more than five years.

The latest Sensis Business Index (SBI) survey has concluded that the difference between the number of confident small businesses (60%) versus the number of worried SMBs (16%) – is the highest business confidence score recorded since March 2011.

Sensis Chief Executive Officer, John Allan said: “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.”

The Index, which reflects the views of 1,000 small and medium businesses from across Australia, also found that perceptions of the economy improved.

“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 Mr Allan.

“Concern about the economic environment has halved, with only one in twenty 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.”

At the state level there were confidence gains everywhere except for Tasmania and the Northern Territory. New South Wales extended its lead, while Western Australia is now the least confident state. South Australia is finally off the bottom, following a 24 point rise in confidence.

Business confidence

It would seem then that Eastern seaboard states have hit a bit of a purple patch.

“The eastern seaboard states are now the shining lights for business confidence nationally. As you head across the continent, however, confidence deteriorates, with businesses in the Northern Territory and Western Australia the least confident in the nation, followed by South Australia” said Mr Allan.

“Tasmania has been on a roller coaster ride in recent times and saw the biggest fall this quarter, down 17 points, to now sit below average, having been the clear leader only two surveys ago.”

In terms of sector, Health and Community Services; Hospitality; and Finance and Insurance now each shared top spot for business confidence.

“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,” said Mr Allan.

Taken before the Federal Election, 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.

Small and medium businesses comprise 99 percent of all businesses operating in Australia.

The full report and video summarising the report can be found at www.sensis.com.au/SBI

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