Business Tentatively Optimistic But!
The latest surveys from Dun & Bradstreet and MYOB show that while businesses are generally positive about where the economy is heading, more SMEs are reconsidering their hiring needs.
From a survey conducted by Simeoni over the same period on clients from different industries has shown similar results, which include:
- Businesses have increased optimism about the economy but more from the fact that “the sky hasn’t fallen” despite everything that has happened and not confident our leaders are setting the platform for growth.
- Businesses are still on a “wait and see” as to whether they are prepared to commit to capital investments. They want to see a more consistent level of confidence each month before they commit.
- Businesses are to review their staff to try and be more efficient, rather than increase staff numbers. There is a greater concern on industrial relation issues and costs with additional staff.
These findings from Simeoni clients are reflected in the Dun & Bradstreet employment expectation and the MYOB business monitor survey.
The latest Dun & Bradstreet and MYOB surveys show that while businesses are generally positive about where the economy is heading, more SMEs are reconsidering their hiring needs.
The D&B survey shows employment expectations have dropped for the fifth consecutive quarter, below the 10-year average to an index of zero. And while other indexes remain positive, they have still fallen. Profit expectations have fallen nine points to 14, the first decline in the past three quarters, while the selling prices index is down to a level of just one, the lowest level since the index began in 1988.
Capital investment expectations are also down nine points to an index of five – businesses are just too nervous to start investing more money.
As stated by Danielle Woods, the Corporate Affairs manager from D & B, "All of the information we have at the moment is showing a real lack of confidence, and that's from a business perspective and a consumer perspective as well," she says.
"We have consumers saying they're not going to take on credit and businesses are saying exactly the same thing. It's great that interest rates are so low, but hiring expectations are down."
"If someone was to leave a company, for example, that company would consider whether or not they need to replace that person."
In yet another sign business is worried about the overall economy, only 6% of businesses said they would borrow to invest. Many more said they would use lower interest rates to pay down debt.
"People are just very hesitant," Woods says.
Yet at the same time, the MYOB Business Monitor survey has provided at least some good news.
The figures from the survey show 26% of SMEs expect the domestic economy to improve within 12 months, up from 19% in July 2012. More businesses are also expecting the recovery to come quicker than they originally thought: 30% of businesses anticipate a revenue increase, while 42% expect revenue to be stable.
There is still pain in some industries. Manufacturing and wholesale suffered the most with a 52% decrease in revenue. New South Wales and Victoria were also the two states with the highest proportion of businesses most likely to see a revenue decrease, at 40%.
John Moss from MYOB has stated while the results between surveys are mixed, the results from MYOB show businesses are "beginning to feel more optimistic".
One big problem cited by the survey was cashflow. Recent data from D&B shows businesses are still waiting an average of 52 days to have their payments settled, a figure Woods says is still a huge stumbling block for SMEs.
"That figure is not high in historic standards, but it means they're waiting longer than they should."
"Other indices are still positive, so they're moving into positive territory. Around the world, we can see the economy is doing well."
But there is some good news ahead – figures from the MYOB survey show one-third of businesses surveyed reported more work or sales in their pipelines for the next three months than they had anticipated.
So there seems to be some mixed feelings in business, with more optimism, with a big “BUT” or “let’s wait and see” if this confidence continues.
The team at Simeoni have always tried to monitor the feelings of its clients, which helps when assisting clients with options for their business.
If you would like to discuss some of your business issues, please do not hesitate to contact us to arrange a meeting.