Business confidence sluggish early in 2018

The PVW Partners’ Townsville Business Confidence Index indicates that business confidence has fallen in the March 2018 quarter resulting in the first negative result since June 2016.

The survey results show that overall confidence of the Townsville business participants decreased by 11.0 points on the December 2017 quarter result, the largest single quarter decrease ever recorded in the survey.  A big component of this decrease was in expectations around consumer demand with 39% of respondents expecting demand for their goods or services to drop this quarter, a marked change from the past couple of years which has seen increasingly positive sentiment around consumer demand. This sends a clear message that despite the groundswell of positive sentiment that has gained momentum over the past couple of years, Townsville’s business community expects a tough start to 2018. Despite the large drop in the March 2018 quarter, business confidence remains stronger than at many points in time over the past 5 years.

While our larger business respondents (those turning over more than $10 million) are now more subdued than in the last couple of quarters, it was the smaller business respondents (those turning over less than $10 million) that were the main contributors to the decline in overall business confidence.

Of some concern for our continued regional economic recovery was the 25% of smaller business reporting they expected to see declining employment opportunities in their businesses this quarter. It is suspected that it is still taking time for the larger construction and infrastructure projects in our region to provide direct benefits to our smaller businesses, let alone broader indirect economic benefits that are derived by all businesses from sustained higher levels of employment and economic activity.

This quarter participants were also asked about the impact they expected the 25 November 2017 Queensland State election result, that saw Labor remain in government, have on their business. While it would be a little extreme to equate the large drop in business confidence in the March quarter to that election result, the Townsville business community did indicate more negative impacts are expected from a State Labor government than positive impacts.

47% of respondents indicated they expected the election outcome to have a negative impact on their business, 35% indicated the outcome would have no impact on their business while only 18% of respondents expected a positive impact from the election outcome.

These results suggest that our three local representatives have some work to do to nurture positive business sentiment in Townsville and play an active role in creating a political, social and economic environment within which businesses can thrive and create enhanced employment opportunities for their constituents.