Political uncertainty impacts Queensland business confidence

Friday 27 October, 2017 | By: James Flaherty

The ongoing speculation surrounding Queensland’s looming election is influencing business confidence across the state, according to the latest Suncorp CCIQ Pulse Survey of Business Conditions.

Download the latest CCIQ Pulse Survey of Business Conditions

CCIQ General Manager of Advocacy, Kate Whittle, said business tends to enter a holding pattern in election cycles and the survey results indicate Queenslanders are starting to feel unsettled..

“We know that businesses in Queensland thrive on stability and at the moment they are taking a wait and see approach to investment and employment until the political cycle comes to its conclusion,” Ms Whittle said.

“If we look at the historical data we see prior to an election there is a flattening of sentiment, followed by buoyancy when a party wins power. For businesses they know that an incoming party has a mandate to act and even if they don’t agree with all the policies of that party, they know that there is certainty going forward.

12 month Outlook

“In this survey a Brisbane business summed up the trend perfectly, ‘A looming QLD election causes instability. The reality is we have changed the Premier three times over the last 4-5 years and each time we have had to reset our business forecasts and start again.’

“In addition, businesses are being influenced by the uncertainty in Canberra, as the citizenship matter plays out, and are genuinely concerned that we could have two elections in the next six months.

“As the political uncertainty takes hold, we are seeing a softening of general business and economic conditions and it is telling that political uncertainty and general economic conditions have replaced electricity as the hot button issues for business.

Profitability

“CCIQ is hopeful that the political speculation comes to an end soon and business is given the certainty of when, not if, an election will be held.”

Suncorp Chief Economist Steven Milch said while political uncertainty may be weighing heavily on Queenslanders’ minds, the overall economic outlook for the state is positive.

“Queensland remains well placed to benefit from the continued expansion of tourism, growth in international student numbers and increased LNG exports,” Mr Milch said.

“Overall, after several years of sub-par activity, Queensland economic growth is forecast to surpass 3 percent in 2017-18 and maintain similar rates over subsequent years,”

Results Overview

  • Sentiment remains stalled in the 12-month outlook for both the Queensland and National economies, with confidence at pessimistic levels.
  • The key issues and concerns facing businesses remain similar to previous reports with international geopolitical issues, energy costs, the uncertainty of policy particularly in the lead-up to a state election and high levels of household debt.
  • The broad range of performance indicators show an ongoing struggle in business operating conditions. While sales and revenues are generally expanding, profitability is still declining as operating costs expand at a faster rate than revenues. This is reflected in the General Business Conditions Index which fell to 46.8 points for the latest quarter.

Contraints on growth

12-month outlook

  • The 12-month outlooks for the Australian (49.8) and the Queensland (47.4) economies are both in pessimistic territory.

General Business Conditions

  • The Pulse General Business Conditions Index (46.8) continues to show operating conditions deteriorated during the latest quarter.
  • Small businesses expect minimal changes in operating conditions for the December quarter with an index reading of 49.0.

Sale and Revenue

  • The Pulse Sales and Revenue Index fell 1.1 points in the September Quarter to 50.7.
  • As the Sales and Revenue Index is measured above the 50.0 level, this marks the seventh consecutive quarter of growth in business revenues.

Labour costs

  • The Pulse Labour Costs Index rose by 2.2 points to 63.1 in September.
  • Over half of the businesses surveyed indicated labour costs had increased during the September quarter. The recent pace of growth in labour costs has significantly exceeded business expectations.

Profitability

  • The Pulse Profitability Index continues to indicate falling profitability, with the index falling marginally to 39.7 points in September.
  • The proportion of businesses reporting profitability increased was steady at 18 per cent. However, more concerning is the high proportion of businesses (47 per cent) which indicated profitability levels fell during the September quarter.

Employment levels

  • The Pulse Employment Levels Index was at the neutral level of 50.0 points.
  • Although the Employment Index was neutral, a positive signal was the proportion of businesses which increased employment levels was at its highest mark for several years at 24 per cent.

Capital Expenditure

  • The Pulse Capital Expenditure Index showed a contraction in small business investment expenditure during the September Quarter.
About The Suncorp CCIQ Pulse Survey of Business Conditions

The Suncorp CCIQ Pulse Survey of Business Conditions is the largest survey of Queensland businesses, providing critical insights into the sentiment of business owners across the State. It is unchallenged in terms of being the most authoritative, timely and comprehensive snapshot of Queensland business expectations and confidence and has been in operation for decades. The survey period is for 18th September to 6th October 2017 and covers business sentiment through the September Quarter 2017.

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