Business and economic sentiment rises but so do doubts

• Confidence in economy, business and employment is growing among accountants.
• Less than one-third say COVID-19 business supports have had a positive impact.
• Awareness of National Response Plan has grown but more find it unclear.

Confidence in Australia’s economic outlook has increased over the past six weeks but accountants are still more likely to be worried, according to a new survey by Australia’s leading professional accounting body, CPA Australia. 

In early October, we surveyed 144 accounting professionals as part of a longitudinal survey of economic and business sentiment, coinciding with the implementation of the National COVID-19 Response Plan. Our previous survey was conducted in August.

“General economic sentiment has lifted, which is positive, however accountants remain more likely to be pessimistic notwithstanding rising vaccination rates,” said CPA Australia Chief Executive Andrew Hunter. 

“We think this reflects ongoing uncertainty about re-opening requirements and what they’ll mean for businesses, their employees and customers, as well as how future outbreaks will be managed.”

Thirty-two per cent of respondents are confident in the performance of the Australian economy over the next three months (compared to 20 per cent in August), while 42 per cent are worried (51 per cent in August). 

The level of optimism increases as longer outlook periods are considered. Forty-four per cent expressed confidence in the state of the economy in 12 months’ time (up from 30 per cent in August).

Respondents are more enthusiastic when it comes to their own workplaces. Sixty-eight per cent are fairly or extremely confident in the performance of their business over the next three months. Only 14 per cent are fairly or extremely worried. 

Thirty-one per cent of respondents expect their business’ or employer’s revenue to increase this month (compared to 29 per cent in August). Meanwhile, forty-four per cent expect revenue to decrease (which was the same in August).

In an unexpected result, less than one third of respondents (28.5 per cent) reported that government business supports have had a positive or very positive impact on their business and business clients.

“This surprised me, and I can’t say for certain why respondents feel this way. But from talking with members and businesses, I’d suggest that it’s a consequence of challenges associated with the design, roll-out and administration of support and grant programs, and the fact that many businesses weren’t eligible despite experiencing difficulties. 

“Issues such as these have left a sour taste in the mouth of many accountants. They’ve been the ones trying to make hastily designed and often vague support schemes workable for business. Our members have worked incredibly hard over the past 18 months assisting their clients or employers access this much needed support quickly.

“We encourage governments to consult early, openly and often with professional and industry associations on the design, structure and administration of support schemes before implementation. This will enhance their effectiveness once introduced.”

Respondents working in businesses remain very confident in their employer’s ability to repay any debts over the next three months. This is despite the closure of several grant programs since that time and the impending closure of others. Only 14 per cent expect their business to have difficulty in repaying their debts over the next three months. 

“The good news is that business solvency isn’t a major factor at this time. This suggests we don’t need to be overly concerned, at least for now, about an upcoming insolvency cliff after supports roll off. That said, we know many businesses will face very tough trading conditions for some time.”

The short-term employment outlook is also positive. Respondents are now more likely than they were in August to expect their employer to increase employee numbers over the next three months (33 per cent compared to 23 per cent). Respondents were also more likely to forecast an increase in staff hours over the next three months, as well as work outsourced to contractors.

“Businesses in locked-down states are making plans for the return of customers. This increases the urgency for governments to provide answers about what they can and can’t do when they re-open.”

CPA Australia has previously published ten questions businesses need answers to before re-opening, and we are seeking answers to these from governments. 

Although confidence in the economy, business and employment grew over the past two months, there remain numerous short-term challenges for businesses. The number one difficulty continues to be uncertainty around lockdowns, followed by attracting and retaining staff. Sixty-two per cent of respondents also said border closures had a negative or very negative impact on their business. 

“With international travel slated to resume in November under the National Response Plan, albeit slowly, this should alleviate some issues for businesses. However, relief may be way off yet for businesses in states which have said they may remain closed into the new year.”   

Although awareness of the National COVID-19 Response Plan has increased from our previous survey, respondents were more likely than before to find it unclear (46 per cent compared to 39 per cent in August).

Media contact

Dr Jane Rennie, General Manager External Affairs on +61 425 869 017 or [email protected]