Business confidence lifts despite tough conditions in hospitality sector

25 January, 2016 by
Aoife Boothroyd

According to a recent quarterly report from marketing services company Sensis, business confidence in Australia has jumped to its highest level in almost five years, registering a net balance of +39.

According to the Sensis Business Index (SBI) survey, more than three times as many small businesses are now confident (57 percent) as opposed to those that are worried (18 percent) about the current economic climate, representing a 12 point rise in confidence among SMEs in the December quarter.

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With the exception of the ACT, each Australian state and territory experienced a rise in confidence.

The Index, which reflects the views of 1,000 small and medium businesses from across Australia, also showed that confidence in the federal government has risen six points (+1 to +7) in the first survey to be taken since Malcolm Turnbull took over as Prime Minister.

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“Businesses told us that the key factors driving confidence are the specific strengths of their business, growing sales and being well established,” said Sensis CEO, John Allan.

“The new Prime Minister has had a positive impact on overall perceptions of the federal government and there has also been a halo effect on confidence, with a number of businesses highlighting this as a reason for their views. However, the government still has some work to do to regain the levels of support seen following the popular Federal Budget in May 2015.”

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In terms of the hospitality sector specifically (accommodation, cafes and restaurants), overall confidence increased by 14 points to +38, keeping it near the national average.

The increased confidence was namely attributed to rising sales. The prime concerns emerging in the sector were an unfavourable business, economic or industrial environment, followed by unfavourable government policy.

Apart from prices (+19), the report suggests that any expected growth this quarter should be modest at best: sales (+7), profitability (-9), wages (+10) and employment (-2). 2016 is anticipated to be considerably better with forecasted growth in sales (+27), profitability (+16) employment (+13), wages (+26) and prices (+38).

Capital expenditure expectations however do not reflect this view (-12).

To read the full report, click here