Monday, 17 February 2020
For the first time in more than 12 months, business confidence and operating conditions have risen significantly, with the December quarter the South Australian Business Chamber – William Buck Survey of Business Expectations bouncing back from all-time lows.
Increasing forward orders, sales, revenue and profitability, combined with businesses noticing their overheads and cost of materials are coming down, have resulted in a strong 13.5‑point rise in confidence and an 18.6‑point jump in conditions.
The South Australian Business Chamber Director of Policy and Advocacy Andrew McKenna said conditions had improved by 24 per cent in December – the largest quarterly increase since 2015.
“However, confidence is still measuring well into negative territory and conditions are also below neutral, well below the pre-GFC 2009 peaks of close to 130 points,” Mr McKenna said. “But improved confidence and conditions are still a step in the right direction, particularly after a rough political year with battles fought on land tax and revaluations. With land tax off the agenda businesses can focus on their core operations.”
Other key indicators including profitability, the cost of materials and overheads also improved. Power prices were moderating, and Mr McKenna said it was encouraging to see relief filtering through. The improvements in conditions were also more sizeable than anticipated.
For a small number of businesses there was a marginal increase in profitability, but the majority reported the same levels or were down. While retail might have recorded a bounce in sales and revenue in November, the Australian Bureau of Statistics’ December figures fell.
“Owners are feeling much better about the operating environment and the economy. Just over a third expected interest rates to fall in the March quarter, compared to 60 per cent into December,” he said. “Fewer businesses also expected the dollar to fall.”
“Another positive indicator for future quarters is that business owners were filling out this survey in January, while bushfires were burning and the coronavirus was starting to make headlines, and impacting on some exports, yet responses still headed upwards.”
William Buck Managing Director Jamie McKeough said internal factors and local conditions had a significant impact on this quarter’s results, with major external events less influential.
“The recent bushfires and the coronavirus outbreak had less of an impact during the quarter, the US-China trade deal has settled and we all seemed to take advantage of our summer break to recover from a challenging year,” Mr McKeough said.
Mr McKeough said improving local confidence “was imperative”, with optimism now finding its way back into conversations.
