Continuing volatility in Townsville’s business confidence

The PVW Partners’ Townsville Business Confidence Index indicates that business confidence continues to be volatile but remains in positive territory in the September 2018 quarter.

The September quarter saw an 8.4 point fall in the index – a stark difference from the June 2018 quarter’s record 12.5 point jump in business confidence (that being the largest single quarterly increase in business confidence in the survey’s 27 year history). While the September result is not a record decease in confidence, its one of the larger downward movements in the history of the index.

The continuing volatility in the index demonstrates that business owners are still cautiously finding their way forward in a generally improving but challenging economic climate in North Queensland. There continue to be many sectors of our economy, like residential housing development, that are operating well below historic levels. It still remains to be seen if a longer-term trend of sustained business confidence will emerge.

Respondents are expecting a stable outcome in terms of employment levels with 80% expecting no change to employee numbers this quarter, this being representative of the outcomes for both larger and smaller businesses. The remaining 20% were fairly evenly split between those expecting to increase employee numbers and those expecting to see a decrease.

A further positive aspect of the results is the vast majority of respondents expecting stable or increasing levels of sales and consumer demand in the September quarter with smaller businesses and those identifying as benefiting from the mining sector being more slightly more confident in these components of the index than larger businesses.

While there is shorter term volatility in the index, there are medium term indications of stable or improving profit expectations for our businesses. This quarter we also asked participants about their

expectations for the profitability of their business in the upcoming financial year (year ending 30 June 2019) relative to the current year profitability (year ending 30 June 2018). 42.9% expected profit levels to remain about the same with 48.6% expecting their business to become more profitability in the year ahead relative to last year. Only 8.5% of respondents expected profitability to decline in the next financial year relative to this financial year.

While profit is only one measure of business performance, it is an important one in terms of the vibrancy of our private sector and the collective ability of businesses to continue investing and creating employment opportunities in North Queensland. As a community we should continue doing all that we can to support the great businesses in our economy and letting them get on being the engine of growth in North Queensland. We should also continue to hold all levels of government accountable to creating the right regulatory and fiscal environment in which businesses can thrive.