In just a month there has been a significant improvement in the economic outlook from Australian small businesses, according to the October Sensis Business Index.
Today 22% of Sydney businesses are Extremely Confident about the next six months. Just a month ago the figure was 12%. And even in locked down Melbourne there has been a similar jump in optimism – up from a lowly 9% to a more positive 16%.
Confidence was also up in Brisbane – now 15% compared to 7% – and Adelaide up from 11% to 17%.
These figures were confirmed with those businesses Extremely Worried about the next six months dropping from 10% overall to 6%. Melbourne has gone from 19% of businesses being extremely worried to just 7% and Sydney from 11% to now just 5%.
Not so good news in Perth with those businesses extremely confident about the future down from 16% to 12% and Hobart down a massive 12 percentage points from 21% to just 9%.
Of the 10 industry sectors surveyed, seven showed improved optimism in regard to being extremely confident about the next six months but three sectors were less optimistic – Retail, Manufacturing and Wholesale.
The Culture and Recreation sector had the biggest turnaround with 19% of businesses in that sector saying they were Extremely Confident about the future. Just a month ago the figure was 5%.
The Communications sector was up more than double from 8% to 19%, Finance and Insurance up from 10% to 19% and Transport up from 6% to 12%.
Sensis CEO John Allan said that across the board there has definitely been an increase in optimism. “Overall the sentiment has changed significantly for the good in a very short period of time,” he said. “The retail, manufacturing and retail industries continue to suffer from low confidence levels when other industries saw a significant improvement on last month”.
The survey is of 500 business owners/managers across all states and across 10 business segments. It was conducted by data insights platform Glow in the first week of October. 27% of the businesses survey had 50 employees or more and 55% of businesses had been operating for more than 10 years.
Nation | VIC | NSW | QLD | SA | WA | TAS | |
Extremely confident | 14.4% | 15.8% | 18.9% | 12.2% | 15.2% | 14.3% | 14.4% |
Fairly confident | 41.9% | 26.7% | 42.1% | 46.9% | 34.8% | 55.7% | 41.9% |
Neither | 21.5% | 28.7% | 21.1% | 18.4% | 18.2% | 14.3% | 27.9% |
Fairly worried | 15.6% | 21.8% | 12.6% | 16.3% | 21.2% | 7.1% | 14% |
Extremely worried | 6.5% | 6.9% | 5.3% | 6.1% | 10.6% | 8.6% | 2.3% |
Sentiment towards the national economy
Overall sentiment on the national economy has improved. Last month 56% of businesses said they believed the national economy would be worse in a year. That has dropped to 47%, although that is still a high number. 23% of businesses say the economy will be better in 12 months up from 19% last month.
“There are some optimistic signs out there,” Mr Allan said. “Every state had a drop in the number of businesses that thought the national economy would be worse in 12 months. Adelaide was down from 60% to 48%, Melbourne down from 62% to 51% and Perth down from 50% to 39%.
“Despite this easing, the number of businesses that expect the national economy to be worse were still high; headed by Canberra with 64% of businesses believing the economy will be worse in 12 months.”
An indication of the two-speed economy saw fewer businesses in Melbourne and Sydney saying the national economy will be better in 12 months. Melbourne was down from 26% to 20% and Sydney down from 25% to 19%.
Six sectors saw an improvement in the economy in the past month whilst four didn’t. The Health sector had the biggest uplift with 25% of businesses in that sector believing the national economy will be better in 12 months – that is more than double the 11% last month.
The Transport sector was double – up from 9% to 18% – and Communications nearly double from 16% to 31%.
On the other side, Retail was down slightly from 19% to 18%, Finance and Insurance down from 26% to 21%, Hospitality down from 30% to 29% and Culture and Recreation the biggest hit – down more than double from 29% last month to 14% this month.
State economies
When it came to the State economies, the biggest shift was in Melbourne with just 23% of businesses believing the Victorian economy will be better in 12 months. Last month the figure was a promising 35%. Also on the negative side were Adelaide down from 36% to 26% and Canberra down slightly from 17% to 16%.
The most confident states were Perth up from 28% to a healthy 39%, Hobart up from 12% to 19%, Sydney up from 22% to 27% and Brisbane up from 21% to 24%.
Border impacts
“There has been a lot of political talk about the closure of borders but just one in five (19%) of businesses said the closures were having a major impact on their business,” Mr Allan said. “40% said the border closures were having somewhat of an impact and 41% said it was having no impact at all.”
Regional areas were less affected with 47% saying the closed border had no impact compared to 38% in metropolitan areas.
The border closures were having the biggest effect on Melbourne businesses with nearly one in three (29%) saying it is having a major impact. They were closely followed by Canberra at 28%. In comparison, it was a major issue for only 13% of businesses in Sydney and Brisbane and just 9% in Hobart.
As expected, the border closures are affecting the Hospitality sector the hardest with 59% saying it was having a major effect. That was more than double the next highest sector – Transport at 26%. Retail was at 20% saying the border closures were having a major effect.
The importance of JobKeeper
More than half the businesses surveyed in Adelaide (53%) said they would not have survived without JobKeeper. The figure was 50% in Canberra, 47% in Melbourne, 40% in Perth, 35% in Brisbane, nearly one in three businesses (29%) in Sydney and 17% in Hobart.
71% of Health and Community Services businesses say they would not have survived without JobKeeper followed by 52% in Retail, 47% in Hospitality and 45% in Construction.
51% of businesses say JobKeeper will be critical in the coming months but there were some big differences in the capital cities. 70% of Melbourne businesses said it would be critical but just 29% in Sydney.
56% of Retail businesses say it will be critical and 53% in Hospitality.
Release Ends
About the October Sensis Business Index
The Sensis Business Index is Australia’s longest running survey of its kind having been established in 1995. The October 2020 SBI involved 505 business owners/managers.
· 21% had 1 to 2 employees with 27% having 50 employees or more.
· 55% of businesses had been operating for more than 10 years.
· 10% of respondents were aged 30 or under, 26% aged 31-40, 24% aged 41 to 50, 19% 51 to 60 and 20% 60 and over. 53% were male and 47% female. It was conducted by data insights platform Glow.
Ten industries were covered:
· Wholesale
· Health & Community Services
· Cultural and Recreational Services
· Manufacturing
· Transport/Storage
· Communications, Property and Business Services
· Construction/Building
· Retail trade
· Accommodation/Cafes/Restaurants
· Finance and Insurance
