Queensland small businesses cautious on summer of content
Small business owners across Queensland can sense economic momentum building, but will need more than three months of improving conditions before they are convinced the economy has turned the corner and is back on track, according to latest research.
The third Queensland Economic Update, conducted by the Chamber of Commerce and Industry Queensland (CCIQ), has again shown signs of improvement for the local economy and is supported by other state and national economic data.
However, a summer of content is far from certain as the business community maintains a very cautious outlook.
The Economic Performance Indicator, which provides an overall measurement of how the state economy is performing and tracks data relative to the other Australian state economies, has risen slightly for the second successive month after two years of weak results.
CCIQ Director of Advocacy Nick Behrens said while unemployment in Queensland is down and retail sales up, businesses indicate that they are less than optimistic for the next 12 months, with weak employment, slow wages growth and continuing inaction by the State Government driving negative perceptions.
“Data released across the past month has provided further indication that momentum is continuing to build in the Queensland economy, following relatively weak performance across the past two years,” he said.
“While this is encouraging, it is interesting that these results are not filtering through to, and producing renewed confidence in, the Queensland economy.”
The latest Suncorp CCIQ Pulse Survey of Business Conditions for the September Quarter, released a fortnight ago, indicates confidence in the state and national economies remains on a downward trend.
“Despite three months of encouraging economic data, which included an upturn in State Final Demand, the recent Suncorp CCIQ Pulse Survey indicates that the business community in Queensland continues to be cautious about the state economy,” Mr Behrens said.
“Although sales and revenue continues to remain in a strong position, and general business conditions are also beginning to improve, an elevated level of pessimism remains for many in the small business community.”
CCIQ hopes that will pick up in December as its recent forecast for Christmas retails sales topped $9 billion for the first time and expected growth of just under 4 per cent.
“The retail sector continues to display signs of improvement however, with annual sales growth rising to 3.1 per cent in trend terms,” Mr Behrens said.
“This has improved considerably from the low point of 0.9 per cent recorded in April this year and is now growing at a larger rate than the national average for the first time since November 2013.
“Despite this, the sector continues to perform well below the 10-year average of 4.3 per cent. However, there is enough evidence to suggest that retail and hospitality businesses should experience a solid performance across the vital Christmas trade period.”
The October Economic Update also notes that residential dwelling approvals continue to fall across Queensland, although they are still at elevated levels.
“While the slowdown is in response to increased concerns surrounding an oversupply of stock, especially across inner-Brisbane, it is expected that the increased likelihood of settlement risk, and reduced purchase and rental prices, will persist across the next 12 months, producing a further slowdown in development activity,” Mr Behrens said.
“In summary, while the evidence continues to highlight that conditions are improving, the business community remains unconvinced as to whether this will be sustained into 2017 and as a result, there continues to be room for improvement across Queensland.”
Some of the key statistics contained in CCIQ’s Queensland Economic Update include:
- Pulse’s 12-Month Queensland Economic Outlook – fell by 1.1 percentage points (8.0 points below the five-year average)
- Economic Performance Indicator – rose by 0.3 percentage points (0.4 points above the five-year average)
- Unemployment – fell by 0.1 percentage points to 6.1 per cent, but remains higher than national rate of 5.6 per cent
- Retail trade – rose by 0.4 per cent, and is growing at a larger rate than the national average for the first time since November 2013
- Christmas sales expected to be solid, but still below average, with growth of 3.9 per cent forecast for 2016
- Building approvals – fell by 1.6 per cent
- High-density building approvals – fell by 2.6 per cent
- CPI – remained steady at 1.6 per cent for the September Quarter
About the Queensland Economic Update:
CCIQ’s monthly report will be crucial reading for the state’s 410,000 small businesses, industry groups, Government departments and politicians at all three levels. It will offer an ongoing examination of key indicators, covering labour, finance, construction, retail and demographics, delivering a much needed source of data and information for Queensland businesses.