Business confidence in Queensland economy soars following State Election.
Business confidence in the Queensland state economy has rallied strongly in the March quarter, increasing to levels not experienced since 2008 prior to the GFC, according to the latest Commonwealth Bank CCIQ Pulse Survey of Business conditions released today.
It is clear that Queensland State Election promises relating to payroll tax, red tape, abolition of the waste levy and tighter economic and fiscal disciplines have had a direct impact upon the optimism shown.
CCIQ President David Goodwin said, “Clearly the surge in optimism amongst Queensland business is a good thing as optimistic businesses invest in infrastructure, people and services and help drive the economic fortunes of the State. What we know is that business and consumer confidence translates into spending and investing and can therefore make or break an economy.”
As expected, the State’s most authoritative business survey found that Queensland businesses suffered a challenging March quarter with sales, profitability and employment remaining down for most sectors over the period.
“Obviously as a state we are not out of the woods yet, however a renewed optimism amongst the business community will help to sow the seeds of long term economic growth and reverse the challenging trading period experienced by businesses over previous quarters,” said Mr Goodwin.
In relation to the national economy businesses are feeling less optimistic.
Business confidence in the Australian economy continued in negative territory in the March Quarter with an increasing number of businesses expecting the national economy to become weaker over the coming twelve months.
Mr Goodwin was concerned that events and policy at the national level could erode gains made in Queensland business confidence.
“The report sends a clear message to the Federal Government that they must start listening to the needs of the business community. In summary, there is now the real possibility that the Queensland State economy returns to the historic, pre-GFC trend of outperforming the national economy as the resource industry continues to boom and other sectors recover.”
Key findings of the Commonwealth Bank CCIQ Pulse Survey of Business Conditions for the March Quarter 2012 include:
- Pulse Business Confidence – Queensland Economy Index increased by over 10 percentage points to 60.8 with more than half (55 per cent) of all businesses expecting economic conditions in Queensland to be stronger over the coming twelve months.
- The majority of businesses reported weaker (38 per cent) or similar (36 per cent) sales and revenue outcomes over the past three months, however a growing number of businesses (37 per cent) expect stronger sales and revenue conditions for June. Accordingly the Pulse Sales and Revenue Index is forecast to reach 55.1 in June 2012.
- The Pulse Profitability Index remained relatively steady at 41.8 over the March Quarter. This is consistent with reports of generally slow business conditions over the past three months, dampened by the election period, poor weather and the usual post-Christmas and holiday period slump.
- The Pulse Employment Index fell slightly to 45.4 in the March Quarter reflecting an increase in businesses reporting weaker employment levels (up by 7 percentage points to 30 per cent).
- The on-going trend, reflected in a marginal decrease in the seasonally adjusted Pulse Capital Expenditure Index to 41.7 for March, has been for capital expenditure to remain the same (49 per cent of business respondents) or weaken (37 per cent of business respondents).
- Level and demand and economic activity continues to be the most significant factor impacting on opportunities for business growth. This is largely influenced by continued falls in consumer confidence and spending and reduced international demand due to international economic stability and the high Australian Dollar.
- Political and economic stability also remains a key concern for Queensland businesses. Whilst many businesses have commented that they are confident the new State Government will be conducive to growth, concern remains over the ability of the Federal Government to instil confidence in the consumer market and economic environment.
Review of regional business and economic indicators for the March 2012 quarter really highlight how dramatic an impact the change in state government is expected to have across Queensland.
- With a few exceptions, all regions experienced a downturn in general business conditions, sales, profitability and employment levels over the March Quarter.
- However, across all regions of the state the message is quite clear that businesses are expecting a resurgence in business confidence and economic activity as reflected by a significant increase in the state 12 month outlook indicator.Of particular note, the North and Far North Queensland regions are enjoying their highest levels of business confidence for over 3 years, suggesting businesses in these regions are significantly rallied by state government commitments for major infrastructure and industry development programs in these regions.
Regional Focus – Far North Queensland
- Far North Queensland, while still having some room for improvement saw a positive turnaround in business confidence over the March Quarter. Business Confidence, as indicated by the 12 Month Outlook Index, grew by over 15 percentage points to 61.3.
- The Far North region also saw only marginal declines in general business conditions and sales and revenue, and when considered against the declines seen in other regions, overall didn’t fair too poorly over the March quarter.
- That being said, profitability and employment both fell sharply and remain significantly depressed. Hopefully the positive upswing in business confidence will crystallise into improved economic fortunes for business in this region over the coming three month period to June.
Regional Focus –North Queensland
- North Queensland businesses saw the greatest increase in business confidence across all regions, and as such this region has the strongest 12 month outlook (66.4) in the state.
- The other positive change has been in the area of employment, which has seen an improvement of about 3 per cent on the previous quarter. While the Index still sits below the positive 50 mid-point line, it is strong compared to some of the other regions across the state. With businesses looking to grow their workforce, it affirms the business outlook for improvements in business conditions.
- Not unlike businesses across the state, other indicators including sales and revenue, profitability, and general business conditions all declined, however not to the same degree experienced in other regions.
- Put in context with other regions and the historic outcomes for this region, North Queensland businesses have had a fairly positive quarter overall.
Regional Focus – Brisbane
- Business confidence in Queensland economy lifted by 10.9 per cent
- All other indicators remained on trend relative to the past 12 month period.
- General business conditions improved marginally, however still remain in negative territory at 48.6.
- Sales and revenue, profitability and employment levels decreased marginally
- Overall a generally optimistic quarter for the Brisbane region
Regional Focus – Sunshine Coast
- The twelve month outlook is significantly positive for the sunshine coast region, lifting by 9 per cent in the March quarter. It is amongst the strongest levels across the regions.
- There was a significant decline in general business conditions over the March quarter.
- Sales and revenue and profitability indicators also took a dive over the March quarter.
Regional Focus – Central Coast
- Whilst suffering a significant downturn in sales and revenue over the March quarter, businesses in this region reported that general business conditions remained fairly steady at 51.5 over the March quarter.
- The 12 month economic outlook for this regain remains very positive at 65.5, one of the strongest across the state.
Regional Focus – Gold Coast
- Comparatively the Gold Coast region has performed the worst over the March quarter.
- Business confidence increased by approximately 2.5 per cent to bring it into positive territory however is the lowest across the state.
- General business conditions, sales and profitability which were all down over the three months to March, are also performing poorly compared to other regions.
- Despite poor economic outcomes, employment remains strong in the gold coast region.
Regional Focus – South West Queensland
- South West Queensland experienced a positive upturn in business confidence consistent with that in other regions.
- Yet, general business conditions, while certainly not the worst across Queensland regions, experienced one of the more significant declines during the March quarter.
- Sales and revenue and profitability were consistent with the other regions, falling somewhat over the March quarter.
- Employment fell, but only marginally.
Regional Focus – Central Queensland
- Central Queensland enjoyed a positive upwards swing in business confidence. Businesses are considerably more optimistic about the coming twelve months then they were about the previous three month period.
- General business conditions remains marginally in positive territory, but as was the case for all other regions, experienced a decline over the March period.
- Accordingly sales and revenue and profitability were also down.
- However Central Queensland was one of only two regions that saw an improvement in employment levels well into positive territory and combined with good expectations for the coming twelve months suggests businesses are expecting business activity to ramp up throughout the remainder of the year.