The Business SA Survey of Business Expectations is an opinion-based survey that samples businesses from various sectors in South Australia.
The purpose of the survey is to provide insight on a broad range of emerging socio-economic issues that impact upon businesses and industry.
South Australian economy
Business confidence improved during the June quarter 2012, across both the South Australian and National economies.
Following a minor decline in the March quarter 2012, business confidence rebounded strongly, rising to its highest level in two years (since the June quarter 2010).
The substantive increase in the South Australian and National business confidence index coincides with an anticipated return to economic growth, despite reduced demand for trade of major commodities. Nationally, the upward trend in leading economic indicators has partly attributed to the boost in business and consumer confidence amid expectations of further rises in the second half of 2012. Domestically, the positive shift in confidence levels falls against a backdrop of rising cost pressures on South Australian businesses, demonstrating short-term resilience to the ebbs and flows of fluctuating economic conditions.
The unexpected rise in business confidence on a State and National is contrary to the anticipated decline in total revenue and overall profitability during the June quarter 2012. Despite a short-term renewal, confidence levels are expected to reverse in the following quarter (September 2012) owing to the pass-on costs associated with the implementation of the carbon tax and increase to the national minimum wage issued by Fair Work Australia, applicable across modern awards. Moreover, recent economic data issued by the Australian Bureau of Statistics (ABS) further highlights the disparity associated with the performance of our State and National economies. In particular, the recent rate cuts have had little effect on the retail sector, with a consequent deterioration in consumption during the last month of the June quarter 2012.
However, improving confidence has been reflected in recent South Australian building approvals, increasing by a seasonally adjusted 17% during to their highest levels since February 2011. Consistent with survey results, the tentative improvement in local unemployment rates is underpinned by general stability across labour markets.