Businesses optimistic about future performance

By Greg Bell

The past few months may have been turbulent for the Australian economy, but businesses nevertheless remain optimistic about what's next for their operations. Many of the gains in confidence that emerged after Malcolm Turnbull was sworn in as prime minister have now subsided, although it's not all doom and gloom.

What are companies optimistic about?

The most recent indicator of business confidence is the Sensis Business Index, which assesses conditions among the nation's small to medium-sized enterprises. The latest results show that during the current quarter, there has been increased confidence when it comes to sales, profitability and wages, which has resulted in an improvement of between four and six points.

In fact, the overall index was only one point below where it was a year ago. Queensland was one of just three states where confidence didn't decline.

The good news for buying commercial property on the Gold Coast is that the building and construction sector is among the strongest.

During the current quarter, businesses were shown to be especially optimistic about sales and profitability, which registered readings of 22 and 23 points respectively. Prices and wages were also strong.

What are the main risks?

It is mainly the current state of the economy that is the greatest cause for concern among Australian firms. Almost a third (32 per cent) of businesses believe the economy is slowing, compared to just 13 per cent who think it is expanding.

The Reserve Bank of Australia (RBA) also recently pointed to some areas of concern in the national economy. Minutes from the 6 October meeting show that members of the RBA board are concerned about restricted GDP growth, as well as the disruptions that the country's export markets have faced.

These are just two of the biggest challenges that will need to be overcome, but the RBA was keen to point out that there is some scope for optimism.

How is the commercial property market faring?

The RBA reflected on current conditions in the commercial property market. Members noted that overseas investor demand remains strong, especially when it comes to office leasing on the Gold Coast and other parts of the country.

Both new and existing office buildings are proving to be a major attraction for investors from Australia and beyond. This is particularly impressive in light of the lending restrictions imposed by the Australian Prudential Regulation Authority late last year.

Whether this starts to have more of an effect at a later stage is yet to be seen, but for the time being at least, the commercial property market is seeing some positive results.

What needs to be done to improve confidence?

Aside from the economic certainty that Australian firms seem to be craving at the moment, it appears that political stability is also on their wish lists. With four prime ministers sworn in over the past few years, it might not be surprising that there's some anxiety about where the country might be heading.

Nevertheless, there are other factors that weigh on company sentiment. Building activity has remained strong over recent months, which has apparently had a positive effect on businesses' outlook.

Not only does this show one area of the economy is performing well, but it also gives greater potential for future financial stability. After all, if more projects are being completed and there's a steady stream of new construction in the pipeline, various aspects of the national economy will benefit.

Locating commercial property that ticks all the right boxes

With demand for commercial property so strong, it could be a wise move to have an agent on your side. Ray White Commercial Gold Coast has been in the market for many years and knows where to find real estate that meets your exact requirements. Give us a call to find out more.

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