On the eve of the first Abbott Government Federal Budget, business confidence has taken an unexpected downturn. The latest Westpac Group CCIQ Pulse Survey for the March Quarter reveals significant falls in business confidence in both the state and national economies. Weeks of government deficit and debt discussions have spooked the business community.
And with the threat of reduced government services, increased taxes and asset sales looming in both the May 13 Federal Budget and June 3 Queensland Budget, concerns are unlikely to ease.
Chamber of Commerce & Industry Queensland General Manager of Advocacy, Nick Behrens, said the Pulse survey of business conditions identified a dip in the recent strong business sentiment.
“These results confirm that we have failed to capitalise on the past six months and the start to 2014 has not seen the initial strides that we would have liked,” Mr Behrens said today.
The last Pulse survey showed record highs in the second half of 2013 for the outlook of the state and national economies. While results remain in positive territory for the March Quarter, there have been significant falls overall.
“These results are unfortunately further reflected across all key business indicators with falls recorded in general business conditions, sales and revenue, profitability, employment and capital expenditure,” Mr Behrens said.
“Diminished consumer and business confidence bought about by government deficit and debt discussions and rising business costs are key contributing factors influencing these results.
“The results are a strong indication that we cannot take business confidence for granted across the conversations relating to deficits, debt and asset sales. They are unquestionably spooking consumer confidence.”
Some of the key points in the Pulse survey reveal:
The Business Confidence Index for Queensland decreased in the March Quarter by 7.1 percentage points to 51.7. The majority of businesses are expecting similar (32 per cent) or stronger (38 per cent) economic conditions in Queensland over the coming 12 months.
The National Business Confidence Index fell by 8.0 percentage points to 52.2. The majority of businesses expect the national economy to strengthen (38 per cent) or remain the same (35 per cent) over the next 12 months.
General business conditions contracted over the quarter, falling 7.5 percentage points to 44.9. The majority of businesses indicated that general business conditions were weaker (38 per cent) or remained the same (36 per cent).
The Sales and Revenue Index fell 8.1 percentage points to 44.3, with 40 per cent of businesses reporting weaker sales over the three month period.
The Profitability Index decreased by 6.4 percentage points to 37.1, the lowest level recorded since the June quarter 2011. Only 17 per cent of businesses reported stronger profitability levels during the quarter.
The Employment Levels Index decreased by 3.4 percentage points to 45.2. The majority of Queensland businesses are keeping employment levels steady (63 per cent).
Mr Behrens said it was crucial that once the Federal and State budgets had been delivered, politicians start focussing on the positives in the economy.
“When we saw some green shoots in the last six months CCIQ cautioned care and attention were needed to nurture a further recovery in business growth. These results indicate it is too early to take for granted,” he said.
“Optimism and expectation of growth in the state and national economy whilst diminished remains there, but Queensland is yet to convert this anticipated improvement in actual business performance.
“The conversion that was anticipated to occur in the March quarter looks to be pushed out by at least three months.”