Cautious recovery as business confidence bounces back
Business in NSW is getting back on track, according to the latest Business NSW quarterly Business Conditions Survey, which reveals the first bounce in business confidence in a year.
The survey shows business perceptions about the performance of the NSW economy rebounded strongly from the record low in June, with strong gains seen in each of the key measures, including staff numbers, cost pressures and overall business performance.
Improved business confidence was also demonstrated in responses to specific questions about the impacts of COVD-19, with nearly 40 per cent of respondents saying they were either ‘more optimistic’ or ‘much more optimistic’ about their business prospects than they were three months earlier.
“2020 has been a horrible year so the strong increase in business confidence is a welcome boost and supports government decisions that have backed a business-led recovery,” Hunter Business Chamber CEO Bob Hawes said.
“However, we are still seeing some variability at a regional level, with some businesses reluctant to invest, hire and train staff despite there being significant government assistance and incentives available to them.
“While fewer businesses are scaling back their capital spending and staffing levels than previously, they are still a long way from being in expansionary mode.”
The bounce-back effect was stronger in the Hunter Valley than in the Newcastle-Lake Macquarie statistical area, where business confidence remained more subdued.
Fifty-five per cent of Hunter Valley businesses reported increased capital spending, 25 per cent experienced increased sales revenue and staff numbers, and 40.9 per cent believed the performance of the NSW economy had improved in Newcastle and Lake Macquarie, however, key business indictors were less buoyant. Capital spending was down in 38.5 per cent of businesses, with only 20.5 per cent reporting an improvement, while only 17.1 per cent indicated an increase in sales revenue and 7.3 per cent an increase in staff.
About 40 per cent were more negative about the performance of the NSW economy, compared with just 22.2 per cent who perceived an improvement in business conditions.
However, 37.8 per cent anticipated an improvement in coming months, as did 63.6 per cent of respondents in the Hunter Valley.
“The regional statistics reinforce the ongoing uncertainty and instability we are seeing in the business environment, which was also reflected in the rising unemployment figures across the region reported last week,” Mr Hawes said.
“While anecdotally we are seeing more business activity, many owners and managers remain reticent to expand due to uncertainty about long-term business prospects.
“The survey was completed prior to the handing down of the federal budget and we hope some of the budget incentives for spending on capital equipment and also apprentice and training support will move the dial positively again in the December quarter.
“As a further incentive to business, the Hunter Business Chamber and Business NSW are calling on the NSW Government to continue the jobs push by announcing a payroll tax rebate in next month’s Budget, to ensure businesses are not penalised for creating new jobs or increasing staff hours.”