Small business confidence heading skyward in 2017
Small business confidence in Queensland is increasing significantly, reaching its highest level for three years, according to latest research by the Chamber of Commerce and Industry Queensland (CCIQ).
The CCIQ-Suncorp Pulse Survey of Business Conditions – the largest poll of its kind in Queensland – found confidence levels were at their highest (49.4) since December 2014.
Almost 600 small businesses across Queensland completed the Pulse survey covering the January 1-March 31 period.
CCIQ chief economist Steven Gosarevski said the catalyst for this result is the improving Queensland economy, which has been underpinned by recent economic data indicating stronger levels of retail spending, improving residential construction and tourism arrivals.
“Despite the strong improvement over the past six months, confidence is still below the neutral level (50.0),” he said.
Mr Gosarevski said pessimism had dropped by 10 per cent over the past year.
“Improved prices for major export commodities, rising job vacancies, low interest rates, and a solid pipeline of infrastructure expenditure have been key areas for the Queensland economy across the past quarter, translating into a more positive outlook from the small business community,” he said.
“The factors weighing positive sentiment down included the continued uncertainty and apprehension regarding the global political climate, international markets, high unemployment, increased operational costs and reduced customer demand.
“However, positive sentiments are overall on the rise for the Queensland economy, having solidified this positive upswing in the past six months.”
Ms Gosarevski said nationally the 12-month outlook had increased by 2.3 points to 54.0 in the March quarter and put the index firmly above the neutral level (50.0).
He said this suggested the Queensland small business community believes the Australian economy will strengthen across the next year.
Suncorp Senior Economist Darryl Conroy said the recently released Federal Budget is also likely to contribute to ongoing positive sentiment.
“As previously passed by Parliament, companies with a turnover of up to $10 million now attract a lower tax rate of 27.5 per cent,” Mr Conroy said.
“The popular $20,000 instant asset write-off has been extended for another 12 months, a new scheme announced to cut red tape, and measures to support new business start-ups.
“The government’s massive investment in infrastructure projects is also expected to boost regional areas and small businesses in associated service sectors.”
Following on from the steep climb in business confidence during the December quarter, confidence in the Queensland economy increased further during the March quarter, recording a rise of 1.7 points.
Business sentiment towards the 12-month outlook for Queensland hit 49.4 in seasonally adjusted terms, its highest level since late 2014, and only marginally below the five-year average of 49.5.
Additional improvements in General Business Conditions and Sales & Revenue were seen across small business as they reported higher index levels for profitability, capital expenditure and employment levels compared to the December quarter.
As Queensland small businesses invest in their own operations, it encouragingly points to further upward momentum through the remainder of 2017.
Mr Gosarevski said improvements across several key economic indicators seen in the previous quarter continued to strengthen business confidence.
“The CCIQ-Suncorp Pulse Survey clearly showed the caution and pessimism of the past two years is lifting across Queensland, with realisation exceeding expectation in some sectors,” he said.
“Business confidence in the state economy recorded another substantial increase in March, rising to its highest level since 2014. Despite the strong improvement over the past six months, confidence is still below neutral levels.
“This result is consistent with the economic data which has been a bit of a mixed bag lately. As demand has started to improve, businesses continued to express concerns about political uncertainty, international markets and the impact of rising costs.
“In terms of economic conditions, the Australian dollar and interest rates are helping stimulate activity, but businesses remain cautious that a rise in interest rates could squeeze costs further.
“Conditions for sales and revenue were reported at their highest level for the past decade. It was one of the rare periods where the realised levels of turnover outperformed sales expectations.
“With sales increasing, businesses are more optimistic about general business conditions. This should be beneficial for the labour market, as business owners have indicated it is their intention to increase employment levels over the next quarter.”
CCIQ urges Queensland Treasurer Curtis Pitt to deliver a small business-friendly State Budget on June 13, on the back of some positive measures in last week’s Federal Budget.
CCIQ sees the top five priorities for small business as payroll tax, workforce skilling, infrastructure investment, electricity pricing, and small business growth and innovation.
This first Pulse survey for 2017 will be significant for CCIQ in understanding how the current business conditions will affect SMEs over the coming months.
12-Month Outlook: Australian and Queensland Economies