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 per cent of Sydney businesses are extremely confident about the next six months. Just a month ago the figure was 12 per cent. And even in locked down Melbourne there has been a similar jump in optimism – up from a lowly 9 per cent to a more positive 16 per cent.
Confidence was also up in Brisbane – now 15 compared to 7 per cent – and Adelaide up from 11 to 17 per cent.
These figures were confirmed with those businesses ‘extremely worried’ about the next six months dropping from 10 per cent overall to 6 per cent. Melbourne has gone from 19 per cent of businesses being extremely worried to just 7 percent and Sydney from 11 per cent to now just 5 per cent.
However, in Perth, those businesses extremely confident about the future were down from 16 to 12 per cent and Hobart was down a massive 12 percentage points from 21 to just 9 per cent.
Of the 10 industry sectors surveyed, seven showed improved optimism in regard to being extremely confident about the next six months. Three sectors were less optimistic: retail, manufacturing, and wholesale.
The ‘culture and recreation sector’ had the biggest turnaround with 19 per cent of businesses in that sector saying they were extremely confident about the future. Just a month ago, the figure was 5 per cent.
Sensis CEO John Allan says 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 says.
“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.
Overall sentiment on the national economy has improved. Last month 56 per cent of businesses said they believed the national economy would be worse in a year. That has dropped to 47 per cent, although that is still a high number. Twenty-three per cent of businesses say the economy will be better in 12 months, up from 19 per cent last month.
“There are some optimistic signs out there. 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 per cent to 48 per cent, Melbourne down from 62 per cent to 51 per cent, and Perth down from 50 per cent to 39 per cent,” John says.
“Despite this easing, the number of businesses that expect the national economy to be worse were still high; headed by Canberra with 64 per cent 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 per cent to 20 per cent and Sydney down from 25 per cent to 19 per cent.
Six sectors saw an improvement in the economy in the past month while four didn’t. On the other side, Retail was down slightly from 19 per cent to 18 per cent, Finance and Insurance down from 26 per cent to 21 per cent, Hospitality down from 30 per cent to 29 per cent, and Culture and Recreation the biggest hit – down more than double from 29 per cent last month to 14 per cent this month.
When it came to the state economies, the biggest shift was in Melbourne with just 23 per cent of businesses believing the Victorian economy will be better in 12 months. Last month, the figure was a promising 35 per cent. Also on the negative side were Adelaide down from 36 per cent to 26 per cent and Canberra down slightly from 17 per cent to 16 per cent.
The most confident states were Perth up from 28 per cent to a healthy 39 per cent, Hobart up from 12 per cent to 19 per cent, Sydney up from 22 per cent to 27 per cent and Brisbane up from 21 per cent to 24 per cent.
“There has been a lot of political talk about the closure of borders but just one in five [19 per cent] of businesses said the closures were having a major impact on their business,” John says.
“Forty per cent said the border closures were having somewhat of an impact and 41 per cent said it was having no impact at all.”
Regional areas were less affected with 47 per cent saying the closed border had no impact compared to 38 per cent in metropolitan areas.
The border closures were having the biggest effect on Melbourne businesses with nearly one in three (29 per cent) saying it is having a major impact. They were closely followed by Canberra at 28 per cent. In comparison, it was a major issue for only 13 per cent of businesses in Sydney and Brisbane and just 9 per cent in Hobart.
As expected, the border closures are affecting the Hospitality sector the hardest with 59 per cent saying it was having a major effect. That was more than double the next highest sector – Transport at 26 per cent. Retail was at 20 per cent saying the border closures were having a major effect.
The importance of JobKeeper
More than half the businesses surveyed in Adelaide (53 per cent) said they would not have survived without JobKeeper. The figure was 50 per cent in Canberra, 47 per cent in Melbourne, 40 per cent in Perth, 35 per cent in Brisbane, nearly one in three businesses (29 per cent) in Sydney, and 17 per cent in Hobart.
Seventy-one per cent of Health and Community Services businesses say they would not have survived without JobKeeper followed by 52 per cent in Retail, and 47 per cent in Hospitality.
Fifty-one per cent of businesses say JobKeeper will be critical in the coming months, but there were some big differences in the capital cities. Seventy per cent of Melbourne businesses said it would be critical but just 29 per cent did in Sydney.
Fifty-six per cent of Retail businesses and 53 per cent in Hospitality say it will be critical.