Improvement in the local and global economy and a stable interest rate outlook appear to be fuelling a turnaround in business confidence.
The Commonwealth Bank’s head of local business banking Adam Bennett says a survey of small to medium sized enterprises, and the bank’s experience with clients, show that businesses are more confident than they were six months ago.
“These findings indicate SMEs are optimistic the Australian economy will continue to gather momentum, with almost 90 per cent of businesses expecting conditions to either improve or remain steady over the next six months,” Mr Bennett said.
“Generally, sentiment is improving, what we’ve heard from our clients that up until quite recently most businesses were seeing downside risk.”
The figures echo recent business surveys by National Australia Bank, which also show a marked improvement.
NAB’s business confidence index hit a two-and-a-half year high in the final months of 2013, and remains near that level in early 2014.
Improved confidence is spreading to more sectors of the economy, not just mining and resources, which has enjoyed an investment boom over the past could of years, NAB chief economist Alan Oster said.
“Confidence has been generally trending higher across the board and is still positive for most industries,” he said.
“Mining is still the only sector to have a negative confidence index.”
Business and consumer confidence fell when the global financial crisis hit, and stayed low as recession in the US and a series of financial crises in Europe weighed on Australian minds.
Mr Bennett said business confidence was important as it drives decision making and capital spending.
“One of the results of the lack of business confidence over recent years is a real reticence to invest in new capital, new equipment and new locations to drive growth,” he said.
“Business owners and operators do read the press and they do take a lot of notice of the indicators of the economy.
“I think they find it hard to assimilate all of that, there are a lot of conflicting messages.”