South Australian businesses have reported a huge spike in confidence and conditions in the September quarter that has far exceeded expectations, showing the resilience and focus of SA Businesses in this Covid crisis.The confidence index of 95.3 is a significant result that is higher than the survey’s 10-year average.
Sales and revenue have also jumped, up 28.7 points on the June quarter and remarkably 16.9 points higher than the same time last year when Land Tax amendments were draining business confidence.
And the expectation is the trend will continue over the months ahead with 36 per cent of SMEs expecting sales and revenue to rise in the next quarter while 28 per cent expect profits to rise too.
While higher revenue is no doubt good news for our recovery, it is somewhat surprising given the ongoing uncertainty in our local, domestic, and international economy
It is clear the JobKeeper extension is a key reason behind the confidence.
In the survey, 66 per cent of respondents said they received JobKeeper 1.0, while 35 per cent said they qualified to receive the JobKeeper 2.0 payment from October to December and 30 per cent were expecting to receive the wage subsidy from January to March 2021.
The cliff has been averted and businesses have time up their sleeves to adapt and plan for the future.
The Federal Budget, which continued the Government’s historic and unprecedented spending on not only job subsidies but also tax cuts, business investment incentives through depreciation and new infrastructure projects is also helping.
Interestingly, a third of businesses said it was harder to attract labour this quarter compared to June while 45 per cent expected to make changes to their supply chain in the future whether that be to increase the number of suppliers, source supplies domestically or support those suppliers who have supported them during COVID-19.
Other encouraging signs included 65 per cent of respondents who said that export sales had stayed the same despite global trade tensions and 83 per cent of businesses who said they did not require further banking support through the December quarter and beyond.
While these figures are much higher than anticipated, a theme that has continued throughout this quarter is the situation of a divided economy.
Once again there are those businesses that remain heavily impacted by Government restrictions such as tourism, hospitality events and then the rest.
In further signs the strong may get stronger and the weak may get weaker, 61 per cent of respondents expect to see a level of rationalization in their industry because of COVID-19.
So, while this remarkable rebound in confidence is worth celebrating, for some the pain continues.
And how long that continues is in the Government’s hands.
Let’s hope the year ends on high for all.