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2014 survey reveals businesses unwilling to invest and expand

January 21, 2014 • News

The January 2014 Survey of Investor Confidence conducted by the Australian Chamber of Commerce and Industry (ACCI) shows that  Australian businesses are losing hope and are less willing to inject additional investments into their businesses.

Image credit: freedigitalphotos By: worradmu

Image credit: freedigitalphotos By: worradmu

The survey covers three months to December 2013 and had 613 respondents, mainly from the construction and manufacturing industries.

Although numbers are seemingly showing positive trends in many parameters and indicators, the real situation is less than optimistic. Coming off low reference points, the improvements are mainly serving to bring the conditions back towards more normal levels, and are far from sufficient to bring investment and hiring intentions into expansion territory.

The index of Own Business Conditions rose from 51.1 to 52.6 over the December quarter, with sales approaching expansionary level just shy of 50 points. However, the profitability index remained in the negative territory despite a rise of 2.4 points over the past year.

The index of Expected Number of Full-Time Employees rose insignificantly this quarter, while the index of Expected Level of Investments Growth continues to be in the negative territory despite improving in the four successive quarters prior to December.

The indexes of National Economic Conditions and Climate for Investment rose, but remained in a negative territory in the December quarter, with expectations for the next quarter slightly more optimistic.

The respondents were also asked to identify the most important constrains on business investment. The results have shown that the current major impediments come from four main sources: government taxes and regulations, the labour market, financial issues and broader macroeconomic conditions.

“The size of dip in the seasonally adjusted expectations indicators suggests that firms are losing hope,” says ACCI acting chief economist Burchell Wilson.

According to the article on the Business Insider, Mr Wilson thinks the results of the survey showed that businesses do not believe the time is right to expand capacity and expect further pressure to reduce the size of their work forces.

“Combined with the disappointing labour market figures for December, the case for a further interest rate cut is growing,” said Mr Wilson.

Entrepreneurs are also concerned by the slowing of needed reforms which are being blocked by the Oppositions and the existing Senate.

To further information visit http://www.acci.asn.au/getattachment/8224be5b-5e9f-4beb-96dd-b5d0dd12325d/ACCI-Survey-of-Investor-Confidence—January-2014.aspx

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