Business confidence rose by nine points this quarter, to now sit at the highest level in more than five years among Australia’s SMEs, according to the latest Sensis Business Index (SBI) survey.
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 net balance score of +44 – the difference between the number of confident SMEs (60%) versus the number of worried SMEs (16%) – is the highest business confidence score recorded since March 2011.
The Index, which reflects the views of 1000 SMEs 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 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 SME 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.
“The eastern seaboard states are now the shining lights for business confidence nationally. As you head across the continent, however, SME 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.”
At a local level, SME confidence rose by 13 points in metropolitan areas (+50) but only rose by four points in regional areas (+35), with the gap between the two widening from six to 15 points this quarter.
“Metropolitan businesses are feeling more confident on all of the key performance indicators and, with the exception of New South Wales, now also lead their regional counterparts in terms of business confidence in every state and territory,” said Mr Allan.
Watch this brief video for an overview on the Sensis research.
https://www.youtube.com/watch?v=xFcCKvWt7XQ
