The latest Westpac- Melbourne Institute Index shows that business confidence remains stable in Australia. The index now sits at 99.9 for Q1 2017, up three per cent from Q1 2016.
However, the figure is decrease from 100.7 figure for Q4 2016 which suggests pessimism in the small to medium business community about future business conditions.
Across the states, Victoria was the most optimistic (106.0) with marginal dips in overall confidence. New South Wales decreased by 8.7 per cent (100.8), South Australia decreased by 8 per cent (94.2) and 1.9 per cent in Queensland (98.3). Western Australia recorded the lowest SME Index reading, reporting an 8 per cent decrease to 80.4.
Westpac economist Matthew Hassan said a number of factors affected the result.
“Trading conditions have clearly improved on a year ago. Some of the concerns about the wider Australian economy have also likely eased with GDP posting a solid rebound in the December quarter, more than reversing a surprise contraction in the previous quarter,” Hassan said.
“Meanwhile the global backdrop has improved, the mining investment downturn is nearly over and interest rates and the Australian dollar remain supportive. There are clearly still significant areas of concern for SMEs; consumer demand is patchy, the outlook for housing is uncertain and profits are under pressure. Overall, the picture looks mixed with improvements in current activity offset by ongoing doubts about the extent to which these will be sustained.”