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Why is business confidence taking a hit?

By Greg Bell

Confidence among Australian businesses is something that's closely monitored – and with good reason. Companies are the engine room of the economy, so when owners aren't happy, there's cause for concern across the board.

Not only does it often lead to lower consumer sentiment, but also a slowdown when it comes to buying commercial property on the Gold Coast and other parts of the country. Some recent indicators have suggested that businesses might not be too optimistic about what the next few months have in store, but why exactly is this the case?

Expectations take a hit

Dun and Bradstreet's Business Expectations Index is just one leading insight into how bosses are feeling. The February edition shows there's been a steep decline in expectations for the second quarter of this year, which is the result of a slowdown in various sub-indices.

Perceptions of sales, profits, employment and capital investment were down 13.2 points in the three months to June. This follows on from a fall previously registered in January, making it the lowest recorded level in the past two years.

However, it seems there is some room for optimism as Roy Morgan Research unveils its latest employment data. The group noted that during February, the unemployment level stood at 10 per cent across the nation, down from 10.3 per cent a month earlier.

It therefore might not be all doom and gloom for Australian firms, especially as far as the employment sub-index is concerned. A record 13.1 million people are now in work, Roy Morgan revealed, which may lead to more office leasing on the Gold Coast  as expanding businesses seek new premises.

Much of this recent increase was a result of people going in search of part-time work, up 730,000 from a month earlier. This is something that's often seen during the summer months as young adults go in search of temporary employment.

Assessing the damage

There are various reasons why some decline in sentiment has been seen. Economic Advisor to Dun and Bradstreet Stephen Koukoulas indicated that economic uncertainty and the forthcoming election will no doubt have a part to play.

However, he was keen to point out that the results needn't be cause for concern just yet. Their impact on the economy is likely to be limited for the time being at least, as there are plenty of other reasons to be optimistic.

"Interest rates are at historical lows, there are clear signs of a turn-around in commodity prices, which, if sustained, should be a positive for the economy, and the Australian dollar remains at a level which is boosting the competitiveness of the export sector," Mr Koukoulas noted.

It's only if these indicators continue to fall that serious questions might start to be asked. Mr Koukoulas emphasised that the next few surveys in particular will be looked at with interest as policymakers determine if this is the start of a wider trend.

Securing your next commercial property

If you're in a position to buy commercial property on the Gold Coast, now could be a good time to invest. The market is particularly buoyant at the moment and with some companies being forced to weigh up their options, you could find it's worthwhile staying ahead of the competition.

Whether you need industrial premises or are interested in retail leasing, the Ray White Commercial Gold Coast team is on hand to help. Give us a call and we'll talk you through your options before helping you find somewhere that meets your every need.

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