Business confidence drops but 12 month economic outlook improves

13 October, 2016 by
Mitchell Paul

Confidence among small and medium businesses (SMBs) dropped this quarter, rebalancing from a five year high last quarter to register a net balance score of +38 (previously +44) according to the latest Sensis Business Index (SBI) survey.

The Index, which reflects the views of 1,000 SMBs from across Australia, revealed three times as many SMBs (57 percent) were confident as those who were worried (19 percent). Despite the dip, the net balance score of +38 is 11 points higher than this time last year.

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While business confidence went down, current perceptions of the economy stayed the same and the 12 month outlook jumped, registering a positive score of +5, eight points higher than last quarter and only the second positive reading since December 2014.

There were confidence gains in Tasmania, Queensland and South Australia, while there were falls in NSW, the ACT, Victoria, the Northern Territory and Western Australia. NSW is again the most confident location, despite a five point fall to +53.

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“The national figures tell a positive story overall, but belie the turmoil some locations are experiencing with Western Australia (+10) and the Northern Territory (+9) languishing well below the national average,” said Sensis CEO, John Allen.  

“Tasmania recorded the most improved score with a 22 point jump thanks to improved business conditions, while Victoria suffered a drop of 15 points to sit below the national average with declining sales and increased cost pressures impacting business confidence.

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“It is pleasing to see sales and profitability performances improve this quarter; the sales result (+5) is particularly encouraging as it is the first time since March 2008 that we have seen consecutive positive quarters.”  

In other results, business confidence across metropolitan and regional locations was varied. Confidence of SMBs in capital cities fell 15 points to +35, while regional confidence rose by eight points to +43 and is now in front.

Regional NSW, Victoria, Western Australia and the Northern Territory are more positive than their city counterparts, with Hobart and Brisbane the most positive capital cities overall.