Business optimistic about economy but rethinking hiring needs: Surveys

Small businesses have delivered mixed sentiments this morning in the form of two different surveys, which show while businesses are optimistic about the overall economy they are beginning to rethink their need for new staff.

The results come as the Reserve Bank is set to meet today for its monthly meeting, although economists expect the official interest rate will remain on hold as the board opts for a “wait and see” approach.

The latest Dun & Bradstreet and MYOB surveys show while businesses are generally positive about where the economy is heading, more SMEs are reconsidering their hiring needs.

The D&B survey shows employment expectations have dropped for the fifth consecutive quarter, below the 10-year average to an index of zero.

And while other indexes remain positive, they have still fallen. Profit expectations have fallen nine points to 14, the first decline in the past three quarters, while the selling prices index is down to a level of just one, the lowest level since the index began in 1988.

Capital investment expectations are also down nine points to an index of five – businesses are just too nervous to start investing more money.

D&B corporate affairs manager Danielle Woods told SmartCompany this morning even though the latest ANZ job ads series shows an uptick in the number of vacancies, the numbers are still negative on a year-by-year basis.

“All of the information we have at the moment is showing a real lack of confidence, and that’s from a business perspective and a consumer perspective as well,” she says.

“We have consumers saying they’re not going to take on credit and businesses are saying exactly the same thing. It’s great that interest rates are so low, but hiring expectations are down.”

“If someone was to leave a company, for example, that company would consider whether or not they need to replace that person.”

In yet another sign business is worried about the overall economy, only 6% of businesses said they would borrow to invest. Many more said they would use lower interest rates to pay down debt.

“People are just very hesitant,” Woods says.

Yet at the same time, the MYOB Business Monitor survey has provided at least some good news.

The figures from the survey show 26% of SMEs expect the domestic economy to improve within 12 months, up from 19% in July 2012. More businesses are also expecting the recovery to come quicker than they originally thought: 30% of businesses anticipate a revenue increase, while 42% expect revenue to be stable.

There is still pain in some industries. Manufacturing and wholesale suffered the most with a 52% decrease in revenue. New South Wales and Victoria were also the two states with the highest proportion of businesses most likely to see a revenue decrease, at 40%.

John Moss from MYOB told SmartCompany while the results between surveys are mixed, the results from MYOB show businesses are “beginning to feel more optimistic”. 

One big problem cited by the survey was cashflow. Recent data from D&B shows businesses are still waiting an average of 52 days to have their payments settled, a figure Woods says is still a huge stumbling block for SMEs.

“That figure is not high in historic standards, but it means they’re waiting longer than they should.”

“Other indices are still positive, so they’re moving into positive territory. Around the world, we can see the economy is doing well.”

But there is some good news ahead – figures from the MYOB survey show one-third of businesses surveyed reported more work or sales in their pipelines for the next three months than they had anticipated.



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