Business confidence dips sharply, but performance remains resilient
The latest Westpac Group CCIQ Pulse Survey of Business Conditions shows Queensland business expectations for economic growth over the next 12 months have deteriorated.
Chamber of Commerce and Industry Queensland Director of Advocacy Nick Behrens said while confidence had fallen, business performance had remained fairly steady.
Pulse revealed that confidence in the Queensland economy had been adversely impacted by drought conditions; slowdown in mining sector investment; elevated unemployment levels; and uncertainty surrounding major infrastructure projects.
“The machinations of government processes, while typical in the months immediately following an election, are undermining business confidence for planning, investment and employment,” Mr Behrens said.
“As a result, businesses are adopting a wait-and-see approach to decisions about projects and employment.”
Mr Behrens said despite the drop in confidence, Queensland business performance across key indicators held steady.
“Sales and revenue over the three months to March pleasingly edged upwards, as did the employment index,” he said
“However, profit margins continue to be crunched by rising operating costs.”
Mr Behrens said that looking ahead to the June quarter, businesses were mildly optimistic about sales and revenue and expected performance across all other key indicators to be steady.
“The State Budget will be the next opportunity to inject confidence within the business community.
“Queensland businesses will be looking for a coherent strategy that is fiscally responsible and at the same time provides stimulus and confidence to encourage businesses to invest and employ.”
Key March Quarter Pulse Survey findings include:
• Confidence in the Queensland economy (37.7) is now at its lowest level in six years. There is more confidence in the Australian economy (42.1).
• General business conditions fell to 38.4 in the March quarter, the lowest in over a decade.
• Sales and revenue improved to 48.3, but business performance remains mixed with no clear sign of a turning point.
• Profitability fell to 37.8 with 53 per cent of businesses reporting weaker profit margins due to rising operating costs.
• Employment levelled to 44.1 as businesses focus on maintaining staffing levels.
• Capital expenditure improved to 43.7 in the March quarter but remains in negative territory.
Regional results showed business confidence had declined state-wide in the March quarter.
The confidence index for Central Queensland (30.6) was the lowest in the state, with ongoing rationalisation in the mining sector the main driver. Confidence in both Brisbane and the Gold Coast was below the five-year average, while the South West and North Queensland regions continued their downward trend in confidence over the past year.
Confidence levels in the Sunshine Coast region remained the highest overall, but much of gains made over the past year had been reversed. Business confidence in Central Coast and Far North Queensland, although down, was less sombre, which could reflect the anticipated increase in tourism.
“When asked about constraints on growth, Queensland businesses point to the slow pace of economic activity and political uncertainty as the biggest areas of concern,” Mr Behrens said.
“These have remained the top two issues for the past four consecutive quarters.”
NOTE: Pulse is the largest survey of Queensland businesses, providing critical insights into the sentiment of business owners and managers across the State. An Index score above 50 represents strengthening prospects for the indicator and an index score below 50 indicates weakening prospects.