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ACCI Survey Of Investor Confidence - January 2011

Summary:
Expectations For 2011 Remain Patchy,
But Wages Costs Most Significant Concern

Own Business:

The current indexes of Own Business improved over the December quarter, with only the latter remaining negative, indicating that the pace of decline in profitability has slowed compared to the previous quarter. Expectations for all three indexes have increased but remain below recent peaks recorded during the same time last year, indicating that businesses are cautiously optimistic about trading conditions in the first quarter of 2011.

National Economy:

The actual indicators for National Economic Conditions and Climate For Investment fell further into contractionary territory over the December quarter, while expectations indices for the next the first quarter of 2011 remains marginally positive. Forward projections for GDP growth and Business Investment remain negative suggesting that businesses are not confident that the Australian economy is in full recovery mode.

Quarterly Constraints On Investment:

ACCI's quarterly index Constraints on Investment found Wage Costs has replaced Taxes and Government Charges as the single most important issues on constraint on investment over the quarter.

This is the first time that Wages Growth has been the number one constraint on investment since in the 13 years since ACCI's Survey of Investor Confidence began in 1998.

Financial constraints also remained significant with Charges by Lending Institutions remaining as the sixth highest issue of concern constraining investment. Insufficient Retained Earnings is of increased importance to Australian business raising from number nine to seven as is Level of Interest Rates which rose from tenth position to eight.

The problem of the skills shortage is also regaining prominence as an issue of concern to business with the Availability of Suitably Qualified Employees rising from the fifth to fourth issue of concern to business  over the quarter.

The full report of ACCI's Survey of Investor Confidence is attached.