Record low in consumer confidence as business confidence rebounds
Saturday, 25 November 2017
Consumer confidence in South Australia has dropped to a record low, while business confidence has rebounded, according to the latest BankSA State Monitor released today.
Conducted by independent research firm, The Sexton Marketing Group, the State Monitor reveals that consumer confidence has dropped 2.4 points from the most recent survey in July and now sits at 96.3 index points, the lowest result in 20 years.
BankSA Chief Executive, Nick Reade, said the state’s historic low in consumer confidence is concerning and is being impacted by a large drop in how consumers feel about their household situation, with this measure recording a 12% drop (to -14%) to the lowest level ever recorded.
"Other contributing factors to the consumer sentiment result include South Australians’ confidence in their ability to change jobs, which has also dropped to the lowest level on record, as well as actual purchase intentions over the last three months and future purchase intentions over the next three months, which have also seen significant falls," said Mr Reade.
"While South Australians have reported a pessimistic outlook regarding their own finances, with factors such as the closure of Holden and electricity prices contributing to the negativity, the business outlook tells a different story."
Despite the fall in consumer confidence, the State Monitor shows that business confidence in South Australia has rebounded from its four-year low in July – rising 7.9 points to 103.6, with the majority of business confidence measures all recording positive uplift, except the intention to make a major purchase in the next 12 months.
Mr Reade said the lift in business confidence, now above the all-important 100 point baseline, is very promising and gives hope that consumer confidence will follow suit.
Business sectors showing the biggest improvement include construction, benefitting from good building and infrastructure work; community services, which is seeing a lot of NDIS-driven activity, and the finance sector.
While jobs sentiment and confidence to seek new employment is down, Mr Reade said last week’s decision by the State Government to drop its SA bank tax was welcome news, and restores certainty in South Australia as an attractive place to do business and create jobs.
"The business community welcomes sound, long-term policies and certainty to invest in their businesses and create employment opportunities," said Mr Reade.
"As a result of the State Government’s decision to drop its bank tax policy, Westpac and BankSA will now move forward in earnest in establishing up to 150 customer process improvement and automation jobs in South Australia.
"I acknowledge the South Australian Liberal Opposition, Australian Conservative Party members Robert Brokenshire and Dennis Hood, and Advance SA’s John Darley for supporting the state’s business community in this regard."
Other key findings from the latest State Monitor include:
- Lower consumer confidence among 35-49-year-olds, males, white collar employees and metropolitan-based respondents;
- Consumer confidence has rebounded for state pride and confidence about the consumer spending climate for the next 12 months, boding well for Christmas spending intentions;
- White collar workers remain more confident than blue collar workers, although both categories recorded falls: white collar down 6.5 points to 100.8, and blue collar down 3.0 points to 96.2; and
- The increase in business confidence can be attributed to improved results in the construction, finance and community service sectors.
Meanwhile, confidence in South Australia’s rural regions has recovered slightly from record lows in July, with overall consumer confidence in rural South Australia rising 2.5 points to 90.1, and business confidence increasing by 5.5 points to 97.8 points.
State Monitor findings from the rural regions include:
West and North (Upper Spencer Gulf, Far North and Eyre Peninsula):
- A major increase in consumer confidence – up 21.3 points from 88.1 to 109.4 (its largest ever increase and the only region in South Australia to record an increase in consumer confidence); and
- A minor decrease in business confidence – down 0.6 points from 92.8 to 92.2 (the least confident rural region and its lowest level since February 2016).
Southern (South Coast, South East, Hills and Murray Plains):
- A decrease in consumer confidence – down 4.3 points from 88.2 to 83.9 (its lowest level ever recorded and now the least confident rural region for the first time in three years); and
- An increase in business confidence – up 7.9 points from 96.3 to 104.2 (the most confident rural region for the second consecutive State Monitor).
Mid North and Riverland (Barossa, Mid North, Riverland and Yorke Peninsula):
- A decrease in consumer confidence – down 2.0 points from 86.9 to 84.9 (its lowest level ever recorded); and
- An increase in business confidence – up 6.8 points from 86.7 to 93.5 (rebounding from its record low in the last State Monitor in July).
Based on a statewide phone survey of 300 consumers and 300 small business owners and managers, the latest BankSA State Monitor is the 64th 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.