Opposition leader Tony Abbott outlined the Coalition’s plans for boosting economic productivity in Sydney today, at the same time that the Australian Chamber of Commerce and Industry was releasing its quarterly survey on investor confidence.
The survey had no major surprises in the top concerns of businesses – government taxes and charges being named the main constraint on investment for the 20th quarter in a row. This was followed closely by federal and state regulations, which Abbott’s announcement today was partly aimed at addressing.
But there are some interesting patterns in the survey when comparing what has actually been happening in recent months against what companies expect in the future. In short, performance has been dragging but businesses now expect some of the drag to ease off in the coming months.
It’s a modestly hopeful outlook — but not enough to inspire solid confidence that activity among ACCI members, who are overwhelmingly smaller and medium-sized companies, will pick up as resources sector activity eases off.
Here’s the chart on companies’ reported profitability – a number below 50 indicates contraction:
But looking ahead, the ACCI members expect a modest improvement in profitability for the September quarter, on trend:
The charts on current versus expected trading conditions show a similar pattern. Companies are asked to make a general assessment of conditions for their business – and while the actual view on conditions are down…
… the expectation on trend for the next quarter is that trading conditions will improve:
The pattern is broadly similar in the charts throughout the report which also covers hiring expectations, national economic conditions and the investment climate. You can access it through the ACCI home page today.
Expectations for investment, overall, across the ACCI’s members remain contractionary. Sewei Goo, a senior policy advisor at the ACCI, told Business Insider the survey’s findings when it came to investment expectations were “not a slight contraction – it’s quite a significant contraction”.
As Greg Evans, the ACCI’s chief economist, said on the survey’s release: “It is concerning that we are yet to see the recovery in business sentiment translating into improvement in actual trading conditions since the global financial crisis.”
Some modest optimism – probably partially driven by the effects of the falling price in the Australian dollar – is a welcome thing. Perhaps the prospect of an imminent change in government and the boost to exporters from the declining value of the Australian dollar has lifted the outlook of business leaders over the past couple of months — just not enough for many companies to be confident that it’s full steam ahead.
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