Commonwealth Bank ACCI Business Expectations Survey

Transcription

1 Commonwealth Bank ACCI Business Exectations Survey Identifying National s and Conditions for Australian Business Issue 63 May 2010 A U S T R A L I A N C H A M B E R O F C O M M E R C E A N D I N D U S T RY

2 Contents Results at a Glance 3 Exected Economic Performance 4 General Business Conditions 5 Sales Revenue 5 Exort Sales 6 Wage Growth 6 Non-Wage Labour Costs 7 Selling Prices 7 Profits 8 Emloyment 8 Overtime Utilisation 9 Investment in Buildings and Structures 9 Investment in Plant and Equiment 10 Comarisons by Size of Business 10 General Business Conditions 10 Wage Growth 11 Emloyment 11 Investment in Plant and Equiment 11 Foreword The Business Exectations Survey is a national survey aggregated from the surveys conducted by member associations of the Australian Chamber of Commerce and Industry. These surveys cover firms in every state, in every industry and firms of every size. In total, they reresent Australia s most comrehensive survey of business exectations. The data in this survey covers the eriod January, February and March There were 2,641 resondents to the survey. Media Enquiries Greg Evans, Director of Economics & Industry Policy, Australian Chamber of Commerce and Industry (02) , greg.evans@acci.asn.au or visit the website Kate Powditch, Public Relations Adviser, Commonwealth Bank (02) Imortant information: Commonwealth Bank of Australia ABN is the sonsor of the ACCI Business Exectations Survey. Commonwealth Bank does not warrant the accuracy, comleteness or currency of information or exectations made in this Survey. Commonwealth Bank will not be liable for or in connection with any loss or damage arising from any inaccuracies, errors or omissions in information made available throughout this Survey. 2

3 COMMONWEALTH BANK - ACCI BUSINESS EXPECTATIONS SURVEY MAY 2010 Results at a Glance 5 Year Average Mar 2009 Dec 2009 Mar 2010 Change June 2010 (e) Exected Economic Performance (a) General Business Conditions Sales Revenue Exort Sales Wage Growth Non-Wage Labour Costs Selling Prices Profits Emloyment Overtime Utilisation Investment in Buildings and Structures Investment in Plant and Equiment (a) Exectation for following twelve months, About the Survey Notes: Throughout this survey, index values are discussed in trend terms. An index level of indicates that there is an exact balance between those who resonded that the variable is growing and those who relied that the variable had declined. Thus, any level below can generally be interreted as meaning that the variable is falling, and conversely, a reading above indicates the variable is increasing. Businesses are asked what their exectations are for the erformance of the Australian economy over the next 12 months in comarison with the ast 12 months. This rovides a reading on the strength of the domestic economy. The survey asks firms to indicate how their business has erformed over the ast 3 months, relative to the revious 3 months, according to 11 different measures, namely Business Conditions, Sales/Revenue, Wages, Non-Wage Labour Costs, Selling Prices, Profits, Emloyment, Overtime, Investment in Buildings and Structures, and Investment in Plant and Equiment. In addition, firms are asked how they believe their business will erform over the next 3 months comared with the ast 3 months. This gives rise to the exectations indices. A number of the survey questions are segmented by size of business, with small firms categorised as having fewer than 20 emloyees, medium having 20 to 99 and large as having 100 or more. Technical Note Each survey reading is calculated by taking a weighted sum of the roortion of resonses in each answer grouing to form an index between 100 and 1 (note that answers are groued according to the strength of conditions). The strongest answer grouing is given a weighting of one and the weakest is given a weighting of zero, with those between receiving a roortional weighting. As a result, if all resondents lace their answer in the strongest grouing, the index would be 100. Conversely, if they all oted for the weakest grouing, the index would be 0. If n is the number of resonse categories, ro is the roortion of resonses in a given category (out of 100) and is the resonse category (ordered from 1 = strongest to n = weakest), then the formula for the index is as follows: = n i=1 n i ro i. n 1 3

4 Business Confidence on the Rise but Profitability Remains Negative The May 2010 Commonwealth Bank ACCI Business Exectations Survey finds that all business actual indicators imroved over the March quarter, excet for the index of Sales Revenue. All actual indexes are now in exansionary territory excet for Exort Sales, Profits, Overtime Utilisation and Investment in Buildings and Structures. Moreover most of the exectations indicators are lateauing after the strong rebound recorded in the revious three quarters. Overall business sentiment imroved over the March quarter, encouraged by better than exected Australian economic erformance and strong growth in Asian economies. The index of Exected Economic Performance (.4) surged to its highest level since the survey began in Setember The index of General Business Conditions (.5) stabilised over the March quarter following strong imrovement in the receding three quarters. Business exects trading conditions will continue to imrove over the next three months. The growth in Sales Revenue (.5) fell marginally over the quarter, however businesses are confident that sales will ick u in the next three months. While the index of Selling Prices (.7) moved into ositive territory for the first time since December 2008, Profits (.8) index remained contractionary over the March quarter. Over the next three months, businesses are execting the latter two indicators to strengthen further. The index of Emloyment (.8) rose to its highest level in two years and businesses are execting further imrovement in hiring intentions. However, both actual and exectations indexes of Overtime Utilisation (.9) remained negative and hours worked are exected to remain unchanged during the June quarter. Consistent with stronger labour market conditions, businesses are also execting Wage Growth (.6) and Non-Wage Labour Costs (.7) to increase further over the next three months albeit with exectations indexes remaining almost on ar with their five year averages. Although Investment in Buildings and Structures (.9) remained negative, Investment in Plant and Equiment (.10) increased further over the March quarter. Businesses are execting to increase their investment exenditure on lant and equiment as well as buildings and structures over the next three months amid strengthening business sentiment. Comarisons by Size of Firm (from.10) show that while conditions were similar for medium and large firms over the last three months, small firms have recorded the weakest erformance with small businesses conditions, emloyment and investment in lant and equiment remaining contractionary. Exected Economic Performance The index of Exected Economic Performance, which measures business exectations for the economy over the next twelve months relative to the revious twelve months, rose 2.9 oints to.4 over the March quarter. This index is now at its highest level since the survey began in Setember The index has rebounded oints in 12 months suggesting that businesses are otimistic that the Australian economy will register a significantly better erformance in 2010 than last year. Exected Economic Performance (a) Mar 2009 Dec 2009 Mar 2010 Much Stronger 0.5% 6.2% 5.1% Somewhat Stronger 8.9% 52.5% 49.9% 70 About the Same 14.9% 29.7% 32.4% Somewhat Weaker 48.3% 9.0% 11.4% Much Weaker 27.4% 2.5% 1.1% Original

5 General Business Conditions The index of General Business Conditions gives an overall business assessment of current trading conditions. The index stabilised at.8, the highest level since the December quarter of 2007 and more than three oints above its five year average of While trading conditions are exected to imrove further over the June quarter, the exectations index remains almost unchanged comared with revious quarter redictions. General Business Conditions U 38.8% 31.8% 42.0% 70 Same 41.1% 44.9%.9% Down 20.1% 23.3% 12.1% Original Sales Revenue The Sales Revenue index fell marginally from.0 to 54.6 over the last three months and remains marginally below its five year average of Businesses are confident that sales erformance will imrove over the June quarter, albeit the exectations indicator is flatlining after three quarters of strong growth. Sales Revenue 70 U 44.1% 32.9% 44.6% Same 32.4%.2%.5% Down 23.4% 31.9% 15.0% Original

6 Exort Sales The Exort Sales index remained relatively unchanged at 49.9 over the March quarter, the highest level since the June quarter of Nonetheless it remains almost on ar with the mark, indicating exort sales are flat comared to the revious quarter. Business exects exort sales growth to imrove further over the coming three months, with the exectations index increasing to Exort Sales U 22.8% 13.1% 20.8% Same.6% 69.4% 69.7% Down 16.6% 17.4% 9.5% Original Wage Growth Over the March quarter, the index of Wage Growth rose from 58.4 to 61.4, the third successive quarterly increase in two years. However, the index remains almost six oints below its five year average of 66.9 indicating wage ressure remains subdued. Looking at exectations data, business exects wage growth to increase further over the next three months. Wage Growth 75 U 25.2% 28.6% 34.5% Same 68.2%.3% 62.2% 70 Down 6.6% 6.1% 3.3% Original

7 Non-Wage Labour Costs The Non-Wage Labour Costs index increased from 58.6 to.9 over the last three months but remains around four oints below its five year average of.1. This index measures labour on-costs such as fringe benefits, workers comensation, ayroll tax, and training. Consistent with wages, business exects growth in this area to increase further over the next three months. Non-Wage Labour Costs U 23.1% 26.6% 28.5% Same 70.9% 67.8% 66.9% Down 6.0% 5.7% 4.6% Original Selling Prices The index of Selling Prices, which measures growth in the rices charged by business for goods and services, rose slightly to.2 over the March quarter, moving above the mark for the first time since December Business exects selling rices to imrove significantly over the June quarter, with the exectations index rising to Selling Prices U 16.0% 17.2% 23.6% Same 68.0% 64.5%.0% Down 15.9% 18.3% 11.4% Original

8 Profits While the index of Profits was almost unchanged at 46.9 over the March quarter, it remains around three oints below, indicating that rofits continued to fall, albeit at a slower ace. Businesses exect rofits to imrove to 57.7 over the June quarter, with the exectations index lateauing after three successive quarter of strong imrovement. Profits U 29.8% 23.1%.2% Same 41.8% 42.2% 44.2% Down 28.4% 34.6% 20.6% Original Emloyment The index of Emloyment has risen from 51.6 to.1 over the last three months, the highest level in two years and slightly above its five year average of Over the next three months, business exects emloyment to increase further, with this index forecast to rise to Emloyment U 24.3% 25.5% 29.5% Same 57.5% 58.2% 56.3% Down 18.2% 16.3% 14.2% Original

9 Overtime Utilisation The Overtime Utilisation index, which measures the change in the number of overtime hours worked by emloyees, imroved from 46.6 to 49.7 over the March quarter. The index remains negative and marginally below its five year average of.7. Business exects overtime utilisation to remain unchanged at 49.7 over the June quarter. Overtime Utilisation U 21.7% 22.2% 19.8% Same.6% 53.8% 61.3% Down 22.8% 24.0% 18.9% Original Investment in Buildings and Structures The index of Investment in Buildings and Structures increased from 47.1 to 49.2 over the March quarter, the highest level since the Setember quarter of However, it remains marginally below indicating that business investment in buildings continues to decline, albeit at a much slower ace. Exectations for the next three months strengthened further to Investment in Buildings and Structures U 17.4% 16.0% 19.5% Same 62.0% 63.4% 63.9% Down 20.5% 20.6% 16.6% Original

10 Investment in Plant and Equiment The index of Investment in Plant and Equiment advanced to 52.3 from.6 over the last three months. This indicator is at its highest level since June 2008 but remains three oints below its five year average of.3. Business exects investment in lant and equiment to strengthen further over the June quarter. Investment in Plant and Equiment U 25.3% 21.4% 27.2% Same 54.3% 57.9% 56.5% Down 20.3% 20.7% 16.3% Original Comarisions by Size of Business A number of comarisons by size of business are rovided below. Please note that the data in this section is neither seasonally adjusted nor trended. Mar 2009 June 2010 (e) Small Medium Large Weighted Average General Business Conditions While large and medium businesses rated General Business Conditions as ositive for the March quarter, small firms reorted conditions remained negative. All businesses exect business conditions to imrove further over the next three months, with large firms rating conditions as the most romising. 10

11 Mar 2009 June 2010 (e) Small Medium Large Weighted Average Wage Growth Wage Growth was highest amongst medium businesses in the latest survey, with small business recording the least wage ressure among the size categories. All businesses exect wages to increase further over the June quarter, with large business execting the largest wage increases. Mar 2009 June 2010 (e) Small Medium Large Weighted Average Emloyment The Emloyment data showed that only medium and large businesses exerienced ositive emloyment growth over the last three months. All businesses exect emloyment to increase over the next quarter, with small business execting the lowest hiring rate. Mar 2009 June 2010 (e) Small Medium Large Weighted Average.3.5 Investment in Plant and Equiment The data on Investment in Plant and Equiment showed that medium and large business size categories scaled u their investment over the March quarter, with small business exeriencing a small contraction. Small businesses exect investment to remain relatively unchanged over the next three months. 11

12 Media Enquires ACCI Director of Economics & Industry Policy Greg Evans (02) Commonwealth Bank Public Relations Advisor Kate Powditch (02) Particiating Organisations This survey is comiled from data collected through individual surveys conducted by members of the Australian Chamber of Commerce and Industry (ACCI). Particiating organisations and contact details at each organisation are listed below. Business SA Burcu Subasi Ph: (08) Printing Industries Association of Australia Hago Tchamkertenian Ph: (02) Chamber of Commerce & Industry Queensland Nick Behrens Ph: (07) Tasmanian Chamber of Commerce & Industry Richard Dowling Ph: (03) Chamber of Commerce & Industry Western Australia John Nicolaou Ph: (08) Victorian Automobile Chamber of Commerce Susie Savage Ph: (03) NSW Business Chamber Aldina Aljukic Ph: (02) Victorian Emloyers Chamber of Commerce & Industry Steven Wojtkiw Ph: (03)