Business confidence down, study shows

Monday, 6 Aug 2012

Business confidence was down in the three months to June after a brief rise in the March quarter.

This is according to new figures from the Australian Chamber of Commerce and Industry (ACCI), which blamed the strong Australian dollar on financial markets, weak consumer demand and a challenging environment amid the global economic slowdown.

Small firms were shown to be the most concerned, although all enterprises cited employment worries, negative general business conditions and a lack of investment.

Greg Evans, director of economics and industry policy for the ACCI, said the data was disappointing, especially as it does not include the impact of the recently introduced carbon tax.

"Flagging business expectations relating to general business conditions, sales and profitability continue to hold back business hiring intentions and capital expenditure plans," he explained.

The survey uses a base mark of 50 to gauge confidence, with any figure over this signifying expansion and all numbers below seen as contractions.

Wage growth was one of the few areas in which businesses felt positive, registering 60 for the June quarter and predicted to rise to 62.5 for the three months to September.

The data comes just days after Cameron Clyne, chief executive officer of the National Bank of Australia, stated the importance of business confidence.

Mr Clyne urged people to stop using the term 'two-speed' to describe the Australian economy because of the negative effect on companies not in the resources sector.