Significant drop in local business confidence

2 August 2011

Business confidence has fallen in the June 2011 quarter, according to the State’s leading business membership organisation, Business SA.

The Business SA Survey of Business Expectations for the June quarter showed that the South Australian confidence index decreased by 11 per cent to 81.5 points.

This significant fall follows smaller decreases in the previous two quarters.

The decrease in business confidence reflects the impact of the Fair Work Australia decision to raise award rates by 3.4%, anticipated increases in interest rates, the rising cost of utilities, the proposed carbon tax and weak consumer confidence.

Business SA Chief Executive Officer, Peter Vaughan, said that the survey results reflected the concerns of the local business community.

“This significant decline in business confidence confirms that businesses are under pressure and are concerned about the immediate outlook,” said Mr Vaughan.

“The extent of the slump in confidence is also largely due to low consumer spending and the high Australian dollar.

“Businesses are being hit with rising costs of rates and utilities, wage increases, the carbon tax and very weak consumer confidence.

“International pressures, such as the Australian dollar, debt problems in Europe and concern about the US economic recovery also contributed to this quarter’s fall in business confidence.

“The sentiment towards general business conditions also continued to decline in the June quarter, decreasing eight per cent to 81 points.

“This drop in business conditions is at odds with the expectations from the March quarter.”

The total sales revenue index decreased eight per cent to 85 points in the June quarter 2011, however total sales revenue and general business conditions are expected to improve slightly in the next quarter.

Mr Vaughan highlighted that ongoing speculation surrounding future interest rate rises continued to restrict confidence.

Business confidence has fallen in the June 2011 quarter, according to the State’s leading business membership organisation, Business SA.

The Business SA Survey of Business Expectations for the June quarter showed that the South Australian confidence index decreased by 11 per cent to 81.5 points.

This significant fall follows smaller decreases in the previous two quarters.

The decrease in business confidence reflects the impact of the Fair Work Australia decision to raise award rates by 3.4%, anticipated increases in interest rates, the rising cost of utilities, the proposed carbon tax and weak consumer confidence.

Business SA Chief Executive Officer, Peter Vaughan, said that the survey results reflected the concerns of the local business community.

“This significant decline in business confidence confirms that businesses are under pressure and are concerned about the immediate outlook,” said Mr Vaughan.

“The extent of the slump in confidence is also largely due to low consumer spending and the high Australian dollar.

“Businesses are being hit with rising costs of rates and utilities, wage increases, the carbon tax and very weak consumer confidence.

“International pressures, such as the Australian dollar, debt problems in Europe and concern about the US economic recovery also contributed to this quarter’s fall in business confidence.

“The sentiment towards general business conditions also continued to decline in the June quarter, decreasing eight per cent to 81 points.

“This drop in business conditions is at odds with the expectations from the March quarter.”

The total sales revenue index decreased eight per cent to 85 points in the June quarter 2011, however total sales revenue and general business conditions are expected to improve slightly in the next quarter.

Mr Vaughan highlighted that ongoing speculation surrounding future interest rate rises continued to restrict confidence.