South Australian businesses to invest in growth and new jobs despite small dip in confidence
Friday, 2 August 2019
South Australian businesses plan to push forward and invest in new plant, equipment and jobs over the next year despite a slight drop in overall confidence, according to the latest BankSA State Monitor released today.
The latest BankSA State Monitor shows the business confidence index fell slightly between February and July this year, from 118.1 points to 115.2, but remains at a comparatively high level for the fourth consecutive survey and higher than at any stage between mid-2011 and early 2018.
With business sentiment remaining relatively strong, businesses intending to make major purchases in coming months are at the highest level ever recorded by the survey.
Businesses also reported a higher level of job creation within their own organisation in the past three months, as well as greater intention to create further employment over the next three months.
However, the survey showed more business owners have been affected by a downturn in turnover. This is combined with lower confidence about the climate for doing business in SA over the next 12 months, in addition to perception that small business activity in the state is lower.
In terms of consumer confidence in South Australia, the BankSA State Monitor reports a small yet encouraging increase since February, rising 1.9 points to 103.8.
Rebounding after two consecutive falls, the increase in confidence index is attributed to greater sentiment that their household financial position will improve.
Tax cuts, lower interest rates and predictions of ongoing economic growth have also fed into increased optimism amongst consumers, who reported a greater intention to make a major purchase over the next three months, such as real estate, cars, whitegoods and holidays.
Additionally, consumers were less worried about their employment security over the past three months than they have been since August 2014.
BankSA Chief Executive, Nick Reade, said the latest State Monitor results are encouraging.
“It’s good to see business confidence continues to remain at a relatively high level, with plans to invest in their businesses and people, despite increased concern that there will not be significant improvement in the performance of their businesses in the near term,” he said.
“There are still some businesses doing it tough, particularly micro and smaller businesses, but it’s encouraging to see a greater number recognise the importance of labour productivity and investment in new plant and equipment in order to maintain and grow their businesses.
“We’ve also seen a small but important lift in consumer confidence, which will be welcome news to local businesses, particularly in the retail sector. Since the Federal Election, the political and economic climate has settled down, allowing consumers to plan ahead with a little more certainty, in addition to recently announced tax cuts and lower interest rates.
“This is the first time since February 2017 that consumers have recorded net positive sentiment about their current situation.
“With businesses foreshadowing increased investment and employment in coming months, it is hoped that consumer confidence continues to rise and provide further stimulus for the economy.”
Other key findings from the latest BankSA State Monitor include:
- Consumers aged 18-24 remain the most confident age segment in South Australia – up to the highest confidence level in three years;
- However, confidence has remained under the 100-point baseline for consumers aged 35-49 for the third consecutive survey, and for consumers aged 50-64 for the second consecutive survey;
- Males are more confident than females for the eighth consecutive survey;
- Community services, financial services and manufacturing industries recorded the largest increases in business confidence; and
- Construction, retail and recreational industries recorded the largest decreases in business confidence.
BankSA State Monitor results for regional South Australia reflected the overall survey results, including a small decrease in rural business confidence, from 112.0 points to 108.3, and a small increase in rural consumer confidence, from 95.7 points to 98.9. Findings for South Australia’s rural regions include:
West and North (Upper Spencer Gulf, Far North and Eyre Peninsula):
- A decrease in consumer confidence – down 0.3 points from 95.2 to 94.9 (extending lower results for the region for the third consecutive survey); and
- A decrease in business confidence – down 4.5 points from 110.8 to 106.3 (but still recording its fifth consecutive confidence result above the 100-point baseline).
Southern (South Coast, South East, Hills and Murray Plains):
- An increase in consumer confidence – up 16.8 points from 91.6 to 108.4 (rebounding to the most confident rural region for the first time in two years); and
- A decrease in business confidence – down 8.5 points from 120.6 to 112.1 (but remains the most confident rural region in the state for the seventh consecutive survey).
Mid North and Riverland (Barossa, Mid North, Riverland and Yorke Peninsula):
- A decrease in consumer confidence – down 8.8 points from 100.8 to 92.0 (falling from the most confident to the least confident rural region in the state); and
- An increase in business confidence – up 2.5 points from 101.3 to 103.8 (the only rural region to record an increase, but still the least confident rural region in the state).
Based on a statewide phone survey of 300 consumers and 300 small business owners and managers, conducted by the Sexton Marketing Group, the latest BankSA State Monitor is the 69th 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.