Friday, 29 August 2008
Confidence Falls as Business Growth Slows – BankSA State Monitor
Consumer and business confidence in South Australia is at its lowest level in more than six years, according to BankSA State Monitor.
The leading confidence indicator, released TODAY, August 29, reflects reduced confidence in the business sector, the future outlook of the River Murray, continuing high fuel and grocery prices and high interest rates.
With 100 index points a neutral reading, South Australian consumer confidence is still well above the average at 117.6, but has dipped from 119.4 in May. This slight fall is the fifth successive decrease and is at its lowest point since 2002.
Meanwhile, confidence among business owners has fallen more sharply to 110.9 – the fourth successive decrease and the lowest reading in seven years (2001).
BankSA Managing Director, Mr Rob Chapman, said that a number of external factors had contributed to the falling consumer confidence.
“Ongoing commentary about the US recession and the impacts on world markets and Australia has affected confidence amongst consumers. There is concern about the future strength of local businesses and consumer spending,” Mr Chapman said.
“There is also a strong sentiment that a lack of business strength also impacts on perceptions of job flexibility, the likelihood of businesses to sustain wages growth and jobs growth and the extent to which business activity is likely to improve.
“At a local level we’re seeing ongoing concern about rainfall and the future of the River Murray and Lower Lakes, the cost of living with higher fuel and petrol prices and a slowing in consumer spending which are dampening both business and consumer confidence.”
Mr Chapman said that despite the fall in consumer confidence, it was promising to see that people still had overall confidence in the South Australian economy.
“Our state has a lot of positives to look forward to – with the defence, mining and infrastructure projects that are underway in South Australia, significant benefits for employment, business and the economy will pave the way for unprecedented economic opportunities and benefits,” Mr Chapman said.
“Consumers and businesses are well aware that such industries are lifting our economic performance and contributing to many positives such as house prices in South Australia recently defying the national downward trend.”
This is likely to have contributed to the slight increase in state pride from 79 to 81 per over the past three months.
Confidence about job security has also increased by nine per cent in the past three months and 74 per cent of consumers believe that new technology is continuing to evolve, creating lifestyle and learning and employment opportunities for consumers.
Consumers aged between 25 – 34 years are the most confident, possibly due to the group capitalising on the opportunities created from technological advancements.
“Pessimism amongst businesses is being largely driven by a belief that growth in the national economy is slowing and that their own business will not be immune from this national trend. This is resulting in business owners’ delaying expenditure for new business investment and cutting back on hiring staff,” Mr Chapman said
Falls in consumer spending, continuing high interest rates and fuel prices, uncertainty about rainfall and the fate of the River Murray, world markets and falls in certain commodity prices have also been the key factors denting business confidence.
One-third of business owners are confident about their own current business situation, but less than half believe that the climate for doing business in the state will improve in the next 12 months. While only one third are likely to make a major business purchase over the next 12 months, 86 per cent believe that their business has successfully adapted to new technology.
The least positive business sectors were transport, manufacturing and agricultural sectors who have strongly felt the effects of rising fuel prices and a strong Australian dollar which has impacted on exports remaining globally competitive.
Riverland businesses were the least confident due to ongoing reduced water allocations.
BankSA State Monitor is conducted three times a year and surveys 300 consumers and 300 business owners/managers across the state. This month’s survey was conducted in the second week of August.
BankSA Managing Director, Mr Rob Chapman will be available for interview on State Monitor from 9.30am to 11.00am, today, August 29.
News Archive
