CBA Future Business Index

This article is by the Commonwealth Bank of Australia as part of a regular series of articles to provide news, insight and expert advice for Not for Profit organisations.

CBA Finance News: Not for Profits should consider the findings from the latest Australian financial survey when planning for the future in the current economic conditions, according to the Commonwealth Bank.

Despite uncertain economic conditions, the latest financial survey from the Commonwealth Bank says mid-market companies are looking to expand their operations over the next six months, with capital expenditure and staffing levels both set to rise. And CBA says the findings are relevant to Not for Profits operating under the same economic conditions.

The second Commonwealth Bank Future Business Index shows a significantly improved outlook for mid-market organisations over the next six months, with the overall index rising 9.6 points
from -0.3 to 9.3. But while businesses from all States and industry sectors reported improved conditions, the level of improvement varied significantly, with some sectors still in negative territory.

CBA says looking across sectors and States:

• Organisations from the Business Services, Health, Education and Construction sectors are the most positive, while those in Retail and Manufacturing still have a marginally negative outlook.
• Transport, Logistics and Wholesale businesses have enjoyed large improvements in business confidence, with the index for the Wholesale Trade sector leaping 19 points.
• Businesses in Western Australia, New South Wales and the ACT are the most optimistic about future business conditions, with New South Wales and ACT businesses experiencing the greatest increase in business confidence levels since September 2011.
• Foreign owned companies continue to be more negative than Australian owned companies.

Domestic factors
Concerns about rising energy prices have eased slightly, although the majority of businesses still expect increases in energy, fuel and wage costs. Since September 2011 there has also been an 8% jump in the percentage of businesses who believe increased domestic competition will have a significant impact over the next six months.

International factors
The ongoing European debt crisis and the possibility of a general economic slowdown in Asia have overtaken US economic weakness as the most significant international concerns, perhaps reflecting more recent signs of a US recovery.
 

State outlook

• WA keeps its title as the most optimistic State, with the highest Future Business Index score across the country, adding another 9 points in the last six months. But while businesses in the West have become more relaxed about the US and Chinese economies, concern is rising over the possible impact of a wider Asian economic slowdown.
• NSW and ACT businesses are the most improved, jumping into second place with an impressive 14 point rise in their Future Business Index. NSW and ACT businesses reported higher expectations for both revenue and profits than in our last survey, although they remain poorly prepared for future fluctuations in business conditions.
• Queensland businesses have become only marginally more optimistic over the last six months, with confidence impacted by natural disasters and expectations of an increase in wages.
• SA and NT businesses are looking to trim headcount and increase profits in the face of falling sales.
• VIC and TAS business conditions have improved significantly, but from a low base, with businesses on balance expecting wages to decline.

The Future Business Index surveys 437 financial decision-makers in public and private companies throughout Australia with turnover between $10 million and $100 million.

You can find the full report and analysis here – http://www.commbank.com.au/corporate/your-industry/future-business-index/