Is this the end of Queensland's boom state status?
Commonwealth Bank CCIQ Pulse Survey of Business Conditions September Quarter 2009
2 November
Business confidence in the Australian economy is soaring however the outlook for Rockhampton and Central Queensland's economic recovery is significantly less optimistic according to the latest results from Queensland's most comprehensive survey of business confidence, the Commonwealth Bank CCIQ Pulse Survey of Business Conditions.
In a sharp turn around, almost 60 per cent of Queensland businesses expect national economic conditions to improve over the next 12 months, compared to just seven per cent of business respondents in the corresponding quarter last year.
However in Queensland, although higher than when measured three months ago, only 42 per cent of businesses expect the Queensland economy to strengthen over the next 12 months.
Despite stronger sales and revenue being reported (41 per cent of respondents reported an increase) profitability of Queensland businesses remains weak with 37 per cent of businesses reporting weaker profits in the September 2009 Quarter.
Unemployment is expected to grow in Queensland with 84 per cent of businesses choosing not to hire new staff in the September 2009 Quarter and predicting that they will continue to hold back on employment in the December Quarter.
Capital expenditure also remained subdued with 80 per cent of business respondents reporting stable or reduced capital expenditure and only 16 per cent of businesses expecting stronger capital expenditure in the December Quarter.
Chamber of Commerce & Industry Queensland Director David Goodwin said that while there is a general feeling that 'the worst is over', Queensland was not experiencing the same level of economic recovery as other states.
"Until employment, profitability and investments recover, Queensland will not experience the improvement that is currently being seen in the other state economies," Mr Goodwin said.
"While the Queensland economy has outperformed the national economy for the past decade, at least for the next 12 months, we can no longer have confidence that we will continue as the boom state.
"Queensland businesses greatest concern is that the state's rising unemployment rate and further increases in official interest rates will continue to undermine consumer confidence and hinder any recovery in the state's economy," he said.
Regional Overview
Rockhampton and Central Queensland businesses marginally outperformed the state average on most key economic indicators in the September 2009 Quarter including profitability, employment levels and capital expenditure. However Rockhampton and Central Queensland businesses still experienced the same lull in recovery as the rest of the state.
Mark Toon, General Manager Corporate Financial Services Queensland, Commonwealth Bank, said while businesses generally have a more positive outlook on Queensland and Australia's economic performance over the coming year, they remain mindful of the remaining impact of the global financial crisis.
"While the state's confidence in the broader economy represents a positive signal for the country, it's also an area to watch," Mr Toon said.
"There is some concern within the business community that the winding back of the Government's stimulus measures may lead to a second dip in economic activity. This, together with a rising interest rate environment, places significant importance on the need for businesses to remain conscious of the volatile conditions they operate in - both at a local and a global level.
"The recovery in conditions is more likely to be sustained if businesses continue to spend rather than respond to minor dips and bumps on the road to recovery. However, sentiment could continue to slip down the track if the expected lift in conditions fails to materialise," he said.
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