How inclined are Australian businesses to invest in new equipment?June 16, 2015
Business confidence is a crucial indicator for the success of the Australian economy. If companies are optimistic about what the future has in store, chances are they will be more inclined to take on staff, spend more and generally support the financial system.
Whether it’s through investing in new technology such as ID card printers or stocking up on office supplies, business spending is a key component of keeping the nation’s finances moving.
Data from the Australian Bureau of Statistics (ABS) suggests that taking on new technology could be a priority for businesses at the moment. Between the March quarters of 2014 and 2015, it revealed that spending on equipment, plant and machinery was up 3.5 per cent in seasonally adjusted terms.
However, for this growth to be sustained, business confidence must remain buoyant. So how are companies faring at the moment, and is there any hope of further improvements in spending and sentiment?
The March Sensis Business Index offers some insight into how well business sentiment fared earlier in the year. Although there weren’t any drastic improvements in confidence, there is nevertheless some room for optimism.
Confidence was largely similar to the same time last year, although considerable improvements were seen in both the ACT and New South Wales. Many regions have faltered because of perceptions surrounding the state of the economy.
In fact, almost three times as many small and medium-sized enterprises (SMEs) think that the economy is starting to slow down. They are also worried about how it will fare another 12 months down the line.
As the ABS figures show, this didn’t have a negative impact on businesses’ willingness to spend. Whether their concerns will amount to cutbacks in spending further down the line is yet to be seen, but it appears that demand for membership card printers and other equipment remains strong.
Weighing up business prospects
So is the future looking any brighter? There are two conflicting surveys on this issue, with the latest Dun & Bradstreet Business Expectations Survey showing that confidence is down moving into the new financial year.
The index witnessed a fall to 13.4 points at the start of the third quarter of the year from the previous three-month period. It is also 19.5 lower than the same time in 2014.
The Bibby Barometer – SME Cash Flow Index Report paints a more optimistic picture, showing that 70.1 per cent of SMEs are either somewhat or very confident about their business prospects. Companies in the insurance and financial services sectors were found to be the most positive in their outlook.