Small business confidence heading for high points in 2017
Small business confidence heading for high points in 2017
Small business confidence in Queensland has jumped to its highest level in three years and the signs are very positive for 2017, according to latest research by the Chamber of Commerce and Industry Queensland (CCIQ).
The Suncorp-CCIQ Pulse Survey of Business Conditions for the December Quarter shows confidence in the state and national economies has turned the corner with data suggesting the caution and pessimism of the past two years could now be lifting across Queensland.
CCIQ State Manager of Advocacy Kate Whittle said a survey of almost 300 small businesses across the state in January showed the single largest quarterly increase in the Queensland economic outlook since September 2013 and the highest recorded level in three years.
“Forecasts in general business conditions suggest the index will begin strengthening even more from the March Quarter, which would be the first time since December 2013 that a score above neutral (50) has been recorded,” she said.
“Sales and revenue has been strengthening (above 50) for four straight quarters and is at the highest level in seven years (December Quarter 2009). It is also the first time this index has been strengthening in both the south east and regional areas in seven years.”
Ms Whittle said the Pulse results were entirely consistent with CCIQ’s Queensland Economic Update, a monthly report on the state’s economy, which had shown nation-leading retail trade figures, rising job vacancies and lower unemployment driving the local economy.
“In broad terms, strengthening sales and revenue conditions across Queensland have been maintained for the past 12 months and this is beginning to produce an increase in labour force demand and employment levels,” she said.
“There has been a solid improvement around the 12-month outlook for both the national and state economies. The national economy is now in positive territory (above 50), suggesting that small business believes it will strengthen across 2017, while the state economy is almost neutral, recording a sizeable increase in confidence.
“This is all dove-tailing exactly with the monthly economic update, which has highlighted the improving economic conditions in Queensland, and in particular, that there is reason to believe that job vacancies and job creation could be a feature of 2017.”
Suncorp Senior Economist Darryl Conroy said the lights on the horizon are certainly shining a little brighter, with forecasts for global growth and strong commodity prices adding additional support.
“Coal prices have been a stand-out here in Queensland, with higher prices injecting much needed confidence into central parts of the state,” Mr Conroy said.
“Construction also remains a pillar of economic support through job creation and the housing market appears to have enjoyed another surge late last year, due primarily to the return of investors.
“Prospects for the service sectors including tourism, health and education are also looking positive.
“A suite of infrastructure projects in the pipeline should also sustain confidence and economic activity going forward.”
Ms Whittle said small business would want to see more of a sustained return to form in economic and general business conditions before they “bought in” to rising economic performance.
“It now appears that this transition may have happened, with optimism in individual conditions now translating into broader confidence in how the Queensland economy will perform across the next 12 months,” she said.
“Uncertainty and apprehension regarding the global political climate, international markets, and high unemployment, especially in regional Queensland still remain. However, an overall improvement in business conditions and sales appears to be producing renewed confidence within the small business community.”
Suncorp-CCIQ Pulse responses:
“An improvement in business confidence, and growth within the Queensland economy, should have a positive impact across the coming months.” Survey Respondent, Brisbane.
“Both the local, and Queensland economy are on the improve, which is starting to impact confidence within the business community.” Survey Respondent, Mackay.
“Local economic drivers are good on the Sunshine Coast with long-term projects underpinning business confidence.” Survey Respondent, Sunshine Coast.
“There was strong growth leading into Christmas with record monthly trading across October and November.” Survey Respondent, South West Queensland.
12 Month Outlook: Australian and Queensland Economies
Pulse Results for December Quarter
• The Queensland Economic Index increased by 7.1 points to 49.0, which is 0.4 percentage points below the five-year average (49.4).
• The Australian Economic Index increased by 2.8 points to 51.5 and is now above the five-year average (50.7) but 2.5 percentage points above the Queensland outlook.
• Negative influencers on the 12-month outlook for the Queensland economy include the new US Presidency and Administration; State Government inaction; Federal Government; global economy and markets; lack of investment and infrastructure; and job creation and unemployment.
• Positive influencers on the 12-month outlook for the Queensland economy include strength of exports and resource prices; lower Australian dollar; rising job vacancies; interest rates and investment and infrastructure projects
• General business conditions rose by 3.3 index points to 46.3 and should further improve in the March Quarter (50.8).
• Sales and revenue rose by 2.2 index points to 52.9 and represents four straight quarters of strengthening performance. The index is now 4.0 points above the five-year average and is set for further improvement, rising to 56.5 in the March Quarter.
• Profitability increased by 1.2 index points to 43.1, and continues to improve on the five-year average (41.6); combined with strengthening sales and revenue results it is forecast to improve in the March Quarter (49.7).
• Employment levels increased by 1.8 percentage points in the December Quarter to record a level of 48.9. This is the highest level since June 2008, shows improvement against the five-year average (45.8), and is forecast to exceed the neutral level for the first time in the March Quarter (51.2), suggesting growing momentum in the Queensland labour market.
• Capital expenditure increased by 0.8 index points to 46.5 and is expected to increase by a further 1.3 index points in the March Quarter. The index has improved on the five-year average (43.3) and continues to show sustained improvement since a recent low point of 39.2 in March 2014.
• While regional analysis highlights that economic conditions are being experienced disproportionately across Queensland, with the South-East recording stronger results relative to regional Queensland, the Sales and Revenue Index is strengthening (i.e. above 50.0) in both South-East, and Regional Queensland, for the first time since the December Quarter 2009.