Mid-sized Australian firms were far more confident about business conditions in the three months to September, with the Commonwealth Bank Future Business Index more than doubling after a depressed June quarter.
CBA surveyed financial decision makers in companies with a turnover of $10 million – $100 million just prior to the September election.
Participants were asked to report on future business conditions, revenue and their preparedness to meet future challenges.
The September index reading of 10.8 was the best quarterly result in two years, with the exception of March 2013. 36% of businesses expected conditions to improve in the next 6 months, with 22% anticipating a decline.
More businesses said they had a well-defined strategy and better understanding of threats with 47% indicating that they were well-prepared for any upcoming challenges, up from 44% in the previous quarter.
The survey found that exchange rate risk was a key focus in the September quarter, with 39% of respondents concerned about the effect of a falling AUD, and 51% calling for an exchange rate of $US0.90 or higher.
Businesses in the IT, media and telco industry recorded the biggest improvement in confidence, followed by those in the finance and insurance and manufacturing sectors.
Business confidence in the mining and construction sectors fell, reflecting a decline in commodity prices and demand.
From the Commonwealth Bank’s report:
“There has been a significant rebound in confidence levels following a period of lower business confidence in the mid-market,” CBA executive general manager of corporate financial services Michael Cant said.
“This is being driven in part by businesses having better control of costs which allows them to more effectively navigate market volatility. In fact, the Index showed that 57 per cent of businesses will place a greater emphasis on cost management initiatives over the next 6 months while only 43 per cent will focus on growth initiatives.
“We are seeing a strengthening in revenue and profit forecasts in the quarter ahead. The Index has showed us that confidence in the mid-market has turned a corner.”
The full report is here.
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