Economic Recovery Fragile According To Business Survey

Economic Recovery Fragile According to Business Survey

Australian companies are more cautious about the economy's recovery this financial year, with lower growth expectations and a stronger focus on short-term profitability and revenue growth, according to a new report by Newport Consulting.

The report, "Managing in Uncertain Times: The Current State of Play", found a downward trend in the amount by which companies expect to grow with, 28% of companies expecting growth of only 5-10% (up 17%), and only 16% expecting growth of more than 50% (down 5%).

Newport Consulting's Managing Director, David Hand, notes the significant difference between business growth expectations this financial year to last year.

"Companies are less optimistic about their outlook this year compared to last year," David explained.

"This year, Australian companies are more cautious about the future, demonstrated by the fact they have lower growth expectations.

"Our data suggests that companies still have a strong focus on short-term performance. Despite indicators of a rise in business confidence, companies are uncertain about the market's stability and the economic and political environment in which they operate.

"Rather than changing their fundamental business strategies, companies continue to adopt a conservative approach to managing their business in uncertain times. They are less willing to invest in capital projects, research and development and environmental policy compared to managing cash flow, profitability and customer service."

The report further finds that companies believe the Federal Government can do more to promote and encourage business growth. It is evident that Australian companies had lost faith in the government prior to the election, impacting business confidence. Of the surveyed companies, 43% said the government was working against business (up 12%) while only 9% think the government was actively helping business (down 6%).

"Our data suggests the Australian Government has it work cut out in order to improve business confidence. It appears that New Zealand's Government is getting it right with business, while the Australian Government has some way to go. Business is calling for greater dialogue and input on core business issues, including tax reform." David said.

Respondents to the survey acknowledged the mining tax, Fairwork Australia and the Carbon Pollution Reduction Scheme (CPRS) as three government initiatives that have been a hindrance to business investment and growth.

About the Report - Newport Consulting's "Managing in Uncertain Times: The Current State of Play" report is an annual study which tracks business confidence and management behaviour of Australia and New Zealand business. The report draws upon responses from companies to an online survey which asks a series of questions on business confidence and productivity. The survey was conducted between 1 June and 30 July, 2010 and covered business expectations for the next 12-36 months.

Newport Consulting (www.newportconsulting.com.au) is a management consulting company assisting organisations improve their business productivity performance. Newport was founded in 2006 by David Hand, one of Australia's leading operational improvement experts. Newport consultants have worked in key industry sectors with some of Australasia's leading companies.

For more information or to organise an interview with David Hand, please contact:
Gemma Manning
Manning & Co
+61 (0) 404 539 400
or at [email protected]

SOURCE: Newport Consulting