ACCI Survey of Investor Confidence - Lacklustre Conditions Strengthen Case for Rate Reduction
Tuesday 2nd October, 2012
The October 2012 ACCI Survey of Investor Confidence shows that most actual and expected business indicators continued to decline over the September quarter, with some indicators falling to their new historic low levels since the Survey began in 1998. This is amid increasing global economic uncertainty, weakness in Australian non-mining industries, soft domestic demand and the strong Australian dollar. With the exception of the Expected Unemployment Rate, all indicators are well below their five year averages over the quarter.
The current indexes of Own Business Conditions, Sales and Profitability fell to their new historic low levels over the September quarter. Business expects trading conditions and profitability to decline further over the December quarter. The index of Expected Number of Full-Time Employees fell to its 14-year low over the quarter.
The actual indicators for National Economic Conditions and Climate for Investment declined to their lowest levels in the survey’s 14 year history over the last three months. Although their expectation indicators have recorded small improvements for the December quarter, they remain significantly below the 50 mark, which separates expansion from contraction, indicating that businesses remain pessimistic about Australia’s economic performance and the climate for business investment.
Business Taxes and Government Charges remained the largest constraint on business investment for the 17th successive quarter. Increasing red tape burden has seen State Government Regulations and Local Government Regulations increasing from the seventh to the fifth position and from the sixteenth to the tenth position respectively, while Federal Government Regulations has edged down from the sixth to seventh largest impediment on investment.
Mr. Greg Evans, Director of Economics and Industry Policy at ACCI commented:
“This Survey highlights that actual trading conditions and business confidence have continued to deteriorate further into negative territory over the September quarter, with some indicators recording their 14-year lows. It is concerning that the declining trends in trading conditions, sales and profits have seen no sign of rebounding since early 2010 which has dampened business forward expectations and investment plans. Moreover, business hiring intentions for the next six month have declined to its lowest level since the survey began in 1998.
“Today’s survey results clearly reflect that manufacturing and construction industries continue to face significant headwinds over the remaining of 2012 and early 2013, which are not helpful in restoring business confidence and performance. This includes weak consumer demand, a persistently high dollar and increasing global economic turmoil. Further rate relief in the order of 0.5 per cent between now and Christmas is required to assist the mainstream economy.”
The Survey covered the three months to September 2012.
The Survey’s respondents are mainly from construction and manufacturing industries.
A full copy of the Survey is available on the ACCI website at: http://www.acci.asn.au
For Further Information:
Director of Economics and Industry Policy:Greg Evans 02 6273 2311 / 0407 204 559
Director of Communications: David Turnbull 02 6273 2311 / 0419 272 802