CONSUMER CONFIDENCE FALLS TO RECORD LOW
Wednesday, 25 June 2014
South Australian consumer confidence levels have fallen to a 17 year low, the latest BankSA State Monitor survey has found.
Following two successive rises, consumer confidence has fallen sharply by 16.2 points to 98.4; the first time consumer confidence has fallen under the 100 index point mark, indicating that there are more pessimistic consumers than optimistic consumers.
The June 2014 BankSA State Monitor is the 54th monitor in a series which has tracked consumer and business confidence in South Australia since late 1997.
Business confidence also declined, but only slightly, between February 2014 and May 2014, representing the third decrease in business confidence over the past four surveys.
In the consumer survey, 28% of people say they are confident that consumer spending will improve over the next 12 months, down 11% compared to the previous State Monitor survey conducted in February 2014.
A total of 27% of people said they were confident they would be able to find suitable work if they wanted to change jobs, compared with 42% in the February 2014 survey.
In fact, only 6% of respondents in the 18-24 age bracket reported confidence in finding another job – the lowest level ever reported in the State Monitor.
At the same time, 55% of people say they are not confident in their own financial position over the next 12 months.
BankSA Chief Executive Nick Reade said while there is no single reason driving this negative shift in sentiment, Federal Budget austerity measures may be a contributing factor, along with the election of a hung State Parliament, sluggish economic growth and military tensions in various parts around the world.
“It would seem that hopes were positive coming into 2014, but those hopes have been replaced by a more sombre outlook resulting with consumer confidence in South Australia now at a record low,” he said.
“This sentiment reflects a belief that there is an austerity period ahead, with consumers contracting their spending in anticipation of tougher conditions for both employment prospects and incomes.”
However, the rise in pessimism was balanced to some extent by a rise in optimism in infrastructure investment, the performance of the sharemarket, property values, the future of the River Murray and the general state of the Australian economy.
While consumer confidence has fallen sharply by 16.2 points to 98.4 points, business confidence in contrast recorded a modest fall of 2.4 index points to 100.4, since the last State Monitor in February 2014.
Specifically, some of the business survey’s key results show that: confidence about SME owners’ own current business situation fell by 3%; perceptions of small businesses picking up fell by 8%; and the likelihood of businesses making a major plant or equipment purchase in the next 12 months fell by 4%.
Mr Reade said both the Community Service and Agriculture industries reported good increases this period, while the Manufacturing sector reported its largest decrease since February 2008.
“I expect the Holden announcement has continued to plague sentiment, with businesses expecting some challenges and tough decisions lay head,” he said.
Positive movements in business optimism were recorded in the creation of additional employment in the last three months, which was up 3% to 29% of businesses surveyed, while SME owners’ concerns about their own business turnover decreased 5%.
However, these positives are tempered by a 3% fall to 20% of businesses likely to create additional employment over the next three months.
For business respondents, the main factors reporting an increase in optimism (or decrease in pessimism), were the performance of the sharemarket, property values, petrol prices, infrastructure projects and the future of the River Murray.
Mr Reade said that, overwhelmingly, SME businesses are cautious about hiring, investing in plant and equipment, and taking investment risks, all of which suggest that businesses are settling in for a period of low growth.
“With confidence tied closely to the state of the economy, this State needs big business, government, academia and the community to support South Australia and inform decision making,” he said.
“It’s through the demonstration of vision and strong leadership, that we’ll deliver this State a charter for stronger economic growth based on investment, innovation, and stimulating consumer demand and spending.”