How has the end of financial year affected confidence?

By Greg Bell

The end of the financial year is often a difficult time for businesses, as they look back on 12 months of trading and make plans for the future. It's also a time when analysts assess confidence levels to determine how companies feel about the current landscape and what the next financial year might have in store.

These readings have a bearing on various aspects of the economy, including how inclined businesses will be to buy commercial property on the Gold Coast. It's therefore important not only to look at confidence data, but to see how it can be applied in the long term.

End-of-year confidence takes a hit 

One leading indicator is the Westpac-Melbourne Institute SME Index, which reflects on conditions among small and medium-sized businesses. During the second quarter of the year, the index stood at 83 points, down 14.4 per cent from three months earlier.

General manager of SME at Westpac Julie Rynski explained that business sales, activity, profits and employment had all witnessed quarterly declines. There had also been an increase in overheads and costs, which has also resulted in a negative impact on firms.

Meanwhile, the Commonwealth Bank Business Sales Indicator (BSI) has also pointed to similarly difficult conditions. May results show the BSI was down 0.1 per cent, indicating a slowdown in spending across the economy.

It's not all bad news

Closer analysis of the figures shows that there is some room for hope across the Australian economy. The CommBank BSI showed expansion in 14 out of 19 industry sectors, while sales increased in five of the eight states and territories.

There's also the fact that annual growth has largely remained steady over recent months. BSI results were relatively constant between November 2015 and April 2016, with annual growth levels registering at between 7 and 7.6 per cent over this period.

As for the Westpac results, the future conditions index gave some room for optimism. Its reading for the second quarter stood at 95.1, and while this is still below the neutral mark of 100, it nevertheless offers some hope for the future of business activity.

Whether this translates into greater interest in industrial leasing on the Gold Coast or other parts of the country is yet to be seen, but what it does indicate is that the future looks bright for Australian firms. There are also high expectations that shifts in the economy will give further cause for celebration.

Westpac senior economist Matthew Hassan explained: "With the RBA expected to cut interest rates again in coming months, SMEs should see at least some improvement in their bottom lines."

Current conditions in Queensland

Looking at the different states and territories, it becomes evident that some parts of the country are faring better than others. The CommBank BSI revealed that Queensland was one of the strongest performers, as sales in the state were up 0.2 per cent in May.

In annual terms, sales growth across the Sunshine State improved 4.6 per cent. This shows that it remains a decent place for businesses to be, which is something they will no doubt be hoping continues well into the future.

If you've got your sights set on buying commercial property on the Gold Coast, we should be your first port of call. Although Australia has faced its fair share of ups and downs lately, we're perfectly positioned to guide you in the right direction and help you find real estate that's best suited to your needs.

Make sure you give our experienced team a call to discuss your requirements, whatever they might be.

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