Cba-acci Survey - Private Sector-led Recovery Slow To Emerge

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2nd November 2010, 02:00pm - Views: 1255





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COMMONWEALTH BANK – ACCI BUSINESS EXPECTATIONS SURVEY 



MR 134/10



WORKING IN PARTNERSHIP FOR THE FUTURE OF AUSTRALIAN BUSINESS

Tuesday 2 November 2010


Commonwealth Bank – ACCI Business Expectations Survey


PRIVATE SECTOR-LED RECOVERY SLOW TO EMERGE


The November 2010 Commonwealth Bank

ACCI Business Expectations Survey

finds that most business actual

indicators deteriorated or remained unchanged over the September quarter, except for the indexes of Wage Growth,

Non-Wage Labour Costs and Selling Prices. All of the expectations indicators have declined compared to their June

quarter’s forward projections.


Overall business sentiment fell in the September quarter amidst the prospect of rising interest rates, withdrawal of

government stimulus spending and increasing uncertainty about the strength of global economic recovery. The index

of Expected Economic Performance fell for the third successive quarter from its historic peak recorded in December

2009, indicating business confidence has continued to moderate. 


Comparisons by Size of Firm reveal that small firms have recorded the weakest performance compared to medium and

large businesses, with small businesses’ conditions, employment and investment in plant and equipment remaining

contractionary during the September quarter.


Mr. Greg Evans, Director of Economics and Industry Policy, Australian Chamber of Commerce and Industry,

commented:


It is concerning that pressure points in the economy have become more evident over the last three months. Business

confidence, which had been overly optimistic since the middle of last year, has moderated over the September quarter.

Weakness in selling prices coupled with increasing labour costs have continued to put downward pressure on business

profits which limits the ability of business to employ and invest.


One positive note from the survey are signs of moderating price pressures which is consistent with the September

quarter CPI results, hence providing the Reserve Bank more flexibility and decreasing the need for

a November

interest rate increase. A deferral in interest rate adjustments will provide much needed breathing space for businesses,

especially small business, to regain stronger footing.


Mr. Symon Brewis-Weston, Executive General Manager, Corporate Financial Services Commonwealth Bank,

commented:


As we move toward the end of 2010, business owners are still finding conditions tough with an expected decline. This

is being compacted by increasing cost pressures as wages and non-wage labour costs have increased again over the

quarter. According to the survey, wages are trending higher and have been doing so since the June quarter of last year.


While confidence is set to recover as trading conditions improve in the December quarter, business owners are

concerned about anticipated interest rate rises in coming months. For businesses, this means we are likely to see

subdued business investment for at least another quarter as businesses manage increasing cost pressures, gain more

certainty around interest rate outlook and see if anticipated improved trading conditions in the December quarter

materialise.


The survey assessed business conditions and business confidence amongst 2,537 businesses around the country over

the July, August and September period. A full copy of the Survey is available on the ACCI website at


For further information:

Greg Evans

Director of Economics and Industry Policy, ACCI

02 6273 2311 / 0407 204 559

Brett Hogan

Director of Communications, ACCI

03 9668 9950 / 0407 273 884

Adam Welch

Associate Media Adviser, Commonwealth Bank

02 9117 7052






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