Call to action as business confidence rises but consumers show caution
Tuesday 1 November, 2016
Business confidence in South Australia is at its highest level in three years, the latest BankSA State Monitor survey has found.
Further, business owners indicated an increase in their intention to create more employment in the next three months.
Released today, the October State Monitor shows that business confidence in South Australia is up by 5.0 points, from 103.1 to 108.1, since the last State Monitor in July.
Confidence was particularly high among the state’s agriculture, construction, retail and finance sectors.
However, consumer confidence fell during the same period by 5.0 points, from 107.1 to 102.1 after holding steady or increasing in the previous two surveys.
As a result, BankSA Chief Executive, Nick Reade, has urged businesses to turn this increasing sentiment into real action in a bid to also boost consumers’ confidence and stimulate spending.
“While it is encouraging to see improved sentiment amongst businesses over the past few months, this is yet to translate into consumers feeling more confident,” said Mr Reade.
“It is therefore important that businesses use their increasing confidence to continue to grow and expand, which will inevitably lead to the creation of more jobs.
“It’s disappointing to see consumer confidence slip back in the latest survey, albeit still above the 100-point baseline.”
Ongoing concern remains around unemployment, with 37% still worried. Additionally, confidence in the ability to find suitable work should they, or someone in their household, need to change jobs was recorded at its lowest level since the survey began.
“The results show that consumers feel less confident about the climate to spend, which has led to fewer major purchases in the past three months,” said Mr Reade.
“It is likely that if businesses start to turn their positive sentiment into growth and expansion, this will also have a flow on effect to households to stimulate consumer sentiment going forward, particularly in the lead up to Christmas.
“Small business is the backbone of our economy and South Australian businesses should be confident in their ability to be successful and lead in their industries.”
Other key findings from the latest BankSA State Monitor include:
Greater confidence among business owners about their own business prospects in the next 12 months:
- Greater intention among business owners to make a major purchase in the next 12 months;
- The agriculture industry reporting the largest increase in business confidence making it the most confident industry sector in SA in this survey;
- The manufacturing industry reporting the largest decrease in business confidence and is now the least confident industry sector in SA;
- Decreased consumer confidence about the climate for consumer spending over the next 12 months;
- 18-24-year-old consumers remaining as the most confident age segment; and
- Consumer confidence about using technologies (such as credit cards, computers, mobile phones, ATMs and EFTPOS) recording its highest level since the survey began.
Rural regions also reported mixed results, with overall figures showing business confidence increased by 3.0 points (99.1 to102.1), with consumer confidence dropping by 6.8 points (106.3 to 99.5) to sit below the 100-point baseline.
West and North (Upper Spencer Gulf, Far North and Eyre Peninsula)
- An increase in business confidence – up 3.4 points from 95.7 to 99.1; and
- A decrease in consumer confidence – down 9.0 points from 99.9 to 90.9.
Southern (South Coast, South East, Hills and Murray Plains)
- An increase in business confidence – up 7.4 points from 102.6 to 110.0; and
- A decrease in consumer confidence – down 1.7 points from 106.8 to 105.1.
Mid North and Riverland (Barossa, Mid North, Riverland and Yorke Peninsula)
- A decrease in business confidence – down 1.4 points from 97.1 to 95.7; and
- A decrease in consumer confidence – down 4.9 points from 111.3 to 106.4.
Based on a statewide phone survey of 300 consumers and 300 small business owners and managers, the latest BankSA State Monitor is the 61st monitor in a series that has tracked consumer and business confidence in South Australia since 1997. A baseline of 100 points is used to which the overall survey results are either added or deducted. A result greater than 100 represents a positive result and therefore more optimistic respondents than pessimistic, while a result less than 100 represents a negative result meaning there are more pessimistic respondents than optimistic.