Consumer confidence lifts while business confidence falls.
While a lot of us have been preoccupied recently with all things Fringe, motor racing and music festivals, it was still business as usual for most of the BankSA team.
Last month BankSA released its 53rd consumer and business confidence State Monitor survey which shows that South Australian consumer confidence levels have risen for the second time in nine months.
While consumer confidence still remains below the historical trend line, it’s at the highest level since February 2013 and the rise of four index points indicates a “cautiously optimistic” public mood.
The BankSA State Monitor has tracked consumer and business confidence in South Australia for more than a decade. Latest results show that 80% of consumers surveyed said they were positive about their own household situation, a rise of 7% from the last survey in September 2013; there was a 2% lift in perception that business activity is increasing and 41% of consumers said they had made a significant financial purchase in the past three months.
BankSA says an explanation for the latest successive rise in consumer confidence could include the fact that official interest rates were kept on hold by the RBA this month; global and Australian share markets made significant gains in 2013 and house prices have rebounded with values improving in 2013.
However other factors likely to have had a limiting effect on confidence include: news that Holden is leaving Adelaide and the State unemployment rate had risen in months prior to the State Monitor survey. While consumer confidence was up a modest four points to 114.6 points, business confidence in contrast fell 9.9 index points to 102.8 points since the last State Monitor in September 2013.
This suggests that SME owners in South Australia are preparing for what they believe will be a tough year ahead, with a slow national and local economy and expectation of belt tightening by the Federal Government. This sentiment is translating into lower intentions to create additional employment, lower intentions to make major business purchases and an increased belief that 2014 will not deliver growth to the SME sector.
The Holden announcement has very likely been a catalyst for some of this sentiment and a signal that some challenges and tough decisions lay ahead, both for government and business.
There has been a lot of talk about the need to lift productivity, limit wages growth and for governments and business to lead the way with expenditure reviews. For the SME sector, the outcome of such reforms is uncertain, and this is reflected in concerns about their own business outlook.
BankSA believes what is needed in times like this is a show of strong leadership from both the government and corporate sectors.
For more State Monitor results, click here.
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