A boost for business confidence leading into 2021: CCIQ
Queensland businesses experienced a boost in confidence, said the Chamber of Commerce and Industry Queensland (CCIQ), as evidenced by the results of the latest Pulse Survey of Business Conditions.
Reflecting business sentiment during the December quarter of 2020, findings show that an increase in seasonal activity coupled with further easing of restrictions provided a more viable operating environment for businesses with more than two in three respondents now confident in their survival during 2021.
Key findings
- General business conditions improved to a satisfactory level with two in five reporting a stronger operating environment
- More than two-thirds of businesses are now confident in their survival when stimulus support ends.
- The COVID-19 vaccine delivered hope for further recovery in 2021, despite the impact of border closures on business uncertainty.
The latest results reflect the third consecutive quarter of strengthening business confidence, with general business conditions and the 12-month economic outlook for Queensland and Australia as a whole now rating as satisfactory.
CCIQ economist Jack Baxter stated that business optimism was evident from businesses across Queensland, and reflected a positive shift in sentiment away from the record lows experienced in the first half of 2020.
“There has been an encouraging uplift in business conditions across all of the economic outlook and performance indicators that now exceed their respective 10-year averages.
“Contributing to the improvements was the complete implementation of staged easing of restrictions, an increase in discretional spending, and general improvements to travel within Queensland,” Mr Baxter said.
While the improvement in business sentiment added to Queensland’s economic recovery, the survey also highlights the challenges that are expected to remain due to persistent global uncertainty.
As Mr Baxter explains, there is a recovery period that follows every economic trough, and that is what we are currently observing in Queensland. However, the complexities involved with the recovery from COVID-19 are only starting to play out.
“Many businesses are currently speculating around the reality of long-term economic recovery when stimulus support measures are removed in 2021, while public health orders stay in place and an immediate return to international tourism remains unlikely.
“There is also the issue of business costs that are reported to be rising at a faster rate than turnover as overseas supply chains dry up and factors such as insurance premium balloon in significance across Queensland,” Mr Baxter explained.
When looking to the year ahead, the announcement of a COVID-19 vaccine becoming available in the March quarter sparked the hope that business conditions will start to return to normal.
This was only enough to encourage marginal improvements to the Pulse Index scores, with the exception of capital expenditure, as the seasonal activity during the December quarter evaporates.
“While businesses experienced a notable increase in sales and revenue due to seasonal activity of over the Christmas and New Year period, slowing sentiment across the forecast indicators reflect the expectations for a slower March quarter.
“What has also been reported by the forecast indicators is the expectation that operating costs including rent, insurance premiums and wage costs will grow, particularly once JobKeeper payments are reduced in January before being removed in March,” Mr Baxter said.
Given Queensland's success in managing the immediate health crisis, the State is primly positioned to reverse plateauing business confidence entering into 2021 and maintain the momentum of recovery reported before the New Year.
For business confidence to continue increasing businesses must be provided with the framework of knowing what measures will be in place to support them now and beyond the immediate COVID-19 recovery.
“We are now at the end of the COVID-19 roadmap, and businesses are calling for further support and transparency around the potential for hot spot closures and restrictions as recently observed in Brisbane.
“Like government, businesses are also in the process of preparing their budget for the year ahead. The level of government support for small business in the State Budget will spell the difference between private enterprise taking a cost management or investment for growth strategy in the year ahead.
“The government has an opportunity to continue supporting confidence by working with the business community to improve and implement measures that will enable further recovery and growth as community vulnerability persists,” Mr Baxter concluded.
When asked about the top three priorities for small business in the upcoming budget, they included:
- Payroll Tax reform – 54%
- Investment incentives for sustainable practices - 41%
- Investment in upskilling and training - 40%
ENDS
View the full Pulse Report here.
About the Pulse Survey
The Pulse Survey has measured Queensland business confidence and expectations for over 25 years. The survey publishes results quarterly from key questions put to the Queensland business community. The survey is unchallenged in terms of being the most authoritative, timely and comprehensive snapshot of Queensland business sentiment, providing critical insights into the opinions of business owners across the state. The survey contains data from a sample covering the entire breadth of the business community. The survey period was from the 1st to 22nd of January 2021 and examined business sentiment and activity throughout the December quarter (2020). 1,450 businesses responded to the survey.