BankSA says business confidence in SA at record highs with stellar performance for many firms

Businesses in South Australia continue to brim with confidence, and BankSA says the recent lockdown is likely to be just a blip, rather than a roadblock to further economic strength.

Business confidence in South Australia is at its highest in the 24 years BankSA has been calculating the measure, and the recent lockdown will likely turn out to be a blip as momentum in the economy builds.

The BankSA State Monitor, which measures business and consumer confidence, found that just before the state went into lockdown earlier this month, business confidence was at a record high of 134.6 points, up 4.7.

The bank’s state general manager business banking David Firth said SA businesses were “increasingly positive, with the transport, finance and recreational industries expressing the most optimism’’.

And while the July survey was completed before the state’s latest lockdown, the results

showed strong momentum which positioned the state well to manage these events, he said.

“Because the lockdown was so short, and there were financial support measures provided by the government, we expect the impact on confidence to be limited,” he said.

Businesses are reporting strong trading results for the past financial year.

“There might be a slight dip in confidence as the challenges of the pandemic continue, however South Australia has managed outbreaks incredibly well and this will continue to support confidence.”

Delving into the figures, there is good news on the jobs and economic front, with the number of businesses which have employed new staff in the past three months increasing by 8 per cent, and 12 per cent more saying they expected to create jobs in the next three months.

Businesses were also bullish on buying new equipment, with a 13 per cent rise in the number of businesses which said they were likely to make a major purchase in the next year.

“On the business side there were lifts across seven of the ten measures and some of those were quite big shifts,’’ Mr Firth said.

“That really mirrors the conversations we’re having with a number of our customers across many sectors, as we got into the 30th of June a lot of businesses were saying to me they were about to rule the numbers off with a record year in turnover.’’

BankSA has speculated that some of the reasons for the strong confidence figures include the fact that a sharp “JobKeeper cliff” did not eventuate for many businesses as they transitioned back to more normal revenues earlier this year, continued low interest rates, SA’s strong performance fighting the pandemic, and “business friendly” state and federal budgets.

Issues which were raised as negative factors included China’s influence on Australia’s economy, with tariffs on products such as wine and barley instigated in the past year or so, world affairs and the world economy generally, fuel prices and the management of the pandemic in other countries.

In specific sectors, Mr Firth said finance reported its highest level of confidence in the 24 years of the Monitor, transport was the highest since August 2000 and construction the highest since August 2007.

“So a number of those sectors that would benefit from the economic stimulus that the government had put in place were well-positioned to push us through the recent lockdown,’’ Mr Firth said.

“Another one that really stood out for me was the recreational sector, the highest level since May 2010, so showing that people are getting out and doing things which is a really positive sign.’’

Consumer confidence moderated slightly, down 3.1 points to 121.8, where 100 is a neutral value.

Mr Firth said these numbers were still very strong and coming off a high level. There was a modest reduction in the number of consumers considering a large purchase in the next three months and also a small drop in the number of people who were confident of a significant, positive change in their financial position.

People were more confident about their job prospects should they need or want to move.

“And interestingly in terms of age bracket, it’s the people in the 25-34 age bracket who were the most confident, and they tend to be the people we sometimes lose to interstate so that’s a positive sign,’’ Mr Firth said.

Australian Bureau of Statistics figures released in May showed the number of people moving to South Australia from interstate had reached its highest level in almost 30 years, with the December quarter the third consecutive quarter of positive net interstate migration.