While business confidence remains steady we see growing concerns about the state of the Australian economy in the latest edition of the Sensis Business Index (SBI).
Small and medium enterprises (SMEs) are the lifeblood of the Australian economy. Changes in confidence among these businesses signal what lies on the horizon for the economy as a whole.
The Sensis Business Index surveyed 1,000 small and medium businesses and found 49 percent of businesses are feeling confident, while 22 percent are feeling concerned. The net balance of these scores is +27 for March, which is the same confidence level we saw last quarter.
The SBI found that despite business confidence remaining steady, perceptions of the economy are now more negative than at any time over the past year. Only 12 percent of businesses believe the economy is currently growing. The net balance on perceptions of growth has dropped from -9 to -23 since the last survey.
Businesses are particularly concerned about a lack of work or sales. Global factors are also weighing on businesses with the economic climate one of the key concerns.
At a state level we see a range of different stories playing out. In most states and territories confidence has dropped.
Victoria and the Northern Territory are down eleven points and South Australia is down thirteen points. South Australia, with a net balance of +6 is now the least confident state, a long way from New South Wales who experienced a dramatic rise and now sits at +38. The Australian Capital Territory was the only other region to experience an increase in confidence this quarter with the other states in decline.
Regionally confidence has improved for the year ahead and businesses are feeling almost as confident as their metropolitan counterparts.
The industry snapshot found all sectors are positive about this quarter. Building and construction is the least confident sector but is still in positive territory at +10. Hospitality jumped 27 points this quarter and is now the most confident sector followed by finance and insurance.
It is good to see all sectors are predicting better sales and profitability. I hope you find plenty of insights in the report, now in its twenty second year. You can join me to discuss it online at #SensisBiz.
John Allan is Chief Executive Officer at Sensis