Business confidence rebounds as strong sales prompt new investment

By Exhibition and Event Association of Australasia, 1 February, 2016

Business confidence rebounds as strong sales
prompt new investment

AusChamber Business Expectations Survey
December 2015 quarter


Business conditions and confidence have accelerated their recovery, the December quarter results of the Australian Chamber of Commerce and Industry Business Expectations Survey reveal today, with all indicators at or above their five-year average and measures of sales and investment performing particularly strongly.


The AusChamber Business Expectations Survey, Australia’s largest quarterly business survey, gauges business perceptions of the future performance of their enterprise on 11 indicators, and of the Australian economy as a whole. The higher the score the greater the expectation of rises among respondents, with a score of 50 indicating an exact balance between expectations of rises and falls.


Overall business sentiment regarding Australia’s Expected Economic Performance is near the five-year average, at 46.5, after improving for three consecutive quarters. Perceptions of General Business Conditions also strengthened for the second consecutive quarter, coming in well above the five-year average, at 45.6.


Sales Revenue, the strongest component of business performance, pushed further into expansionary territory, to 52.4, following two years of almost uninterrupted improvements. Export Sales followed a similar pattern, edging into positive territory at 50.4. Profits have also risen rapidly, but remain relatively weak in absolute terms, at 44.9.


Against this backdrop business are boosting investment. Investment in Plant and Equipment rose for the third consecutive quarter, to 50.5, followed closely by Investment in Buildings and Structures, which jumped 2.7 points to 48.6.


Businesses are also expanding their payroll, with Employment rising close to neutral, at 49.2, and continuing increases in Overtime Utilisation, rising to 47.7.


The strengthening labour market continues to translate into cost pressures, with Wage Growth and Non-Wage Labour Costs rising even further above their five-year average. In contrast, Selling Prices is the only indicator that fell over the past 12 months.


Kate Carnell AO, CEO of the Australian Chamber, said: “The latest AusChamber Business Expectations Survey shows that Australian businesses are growing increasingly confident about the future. It is encouraging to see that all indicators are at or above the five-year average, with the outlook for sales and investment performing particularly strong.


“The Australian economy is facing significant international headwinds, including uncertainty over China and gyrations in global stock markets. But there are also some reasons for optimism. The relatively low value of the Australian dollar is making our exports more competitive and the low oil price is easing cost pressures on business and leaving more money in the pockets of consumers.


“Businesses are telling us they are increasingly willing to undertake investment and hire new staff, which will have a significant multiplier benefit as it washes through the economy. Confidence is still fragile, though, so the Government and Opposition would be wise to consolidate that positive sentiment through policies that boost productivity and anticipate future challenges.”


The Business Expectations Survey compiles data from surveys conducted by members of the Australian Chamber of Commerce and Industry. There were 3,405 respondents to the December-quarter survey, including businesses of all sizes, across a wide range of industries and all mainland states.


The AusChamber Business Expectations Survey results are available on the AusChamber website.


For more information:

Kate Carnell AO | Australian Chamber CEO | 0415 662 266
Jessica Wright | Senior Manager – Media | 0439 429 259

Source: Australian Chamber of Commerce and Industry