While business confidence in Australia has jumped to highest level in over five years there has been a downward slide in wages and profitability.
Business confidence has risen by nine points this quarter to sit at the highest level in more than five years among Australia’s small and medium businesses (SMBs).
This was the finding of the latest Sensis Business Index (SBI) survey, which revealed that employment has improved and prices have remained positive.
However, Sensis CEO John Allan said wages and profitability have gone backwards.
“Rather than being driven by these indicators, confidence is instead being driven by perceptions that the overall economic environment is improving,” he said.
“On top of this, the non-cyclical influences remain strong, with businesses continuing to feel particularly positive about their own specific business strengths.”
The net balance score of +44 – the difference between the number of confident SMBs (60%) versus the number of worried SMBs (16%) – is the highest business confidence score recorded since March 2011.
The index, which reflects the views of 1000 small and medium businesses from across Australia, also found that perceptions of the economy improved by 14 points this quarter, although they remain negative overall on -8.
“Perceptions of the economy have been negative for some time, and while they remain negative, they have improved to the best level we’ve seen in two years,” Allan said.
At the state level there were confidence gains everywhere except for Tasmania and the Northern Territory. New South Wales extended its lead, while Western Australia is now the least confident state. South Australia is finally off the bottom, following a 24 point rise in confidence.
