In good news for the local economy, South Australian consumer and business confidence showed strong gains in September as highlighted in the latest BankSA State Monitor survey.
Consumer confidence rose 9.9 points between May and September 2013, following a sharp fall in the May 2013 State Monitor when it was at the lowest level recorded since the survey began in 1997.
Business confidence is now at its highest in more than two years. It rose sharply in September by 18.6 index points to 112.7, a significant rise off a low base but still remains below the longer term trend line.
The BankSA State Monitor is conducted three times a year and measures consumer and business confidence in South Australia.
While latest consumer confidence levels are still historically low, at 110.6 index points, the level has improved from the previous 100.7 points reported in May.
A reading of 100 points is a neutral score, so anything above 100 index points means there are still more optimists than pessimists in the sector. The index was well above 130 points during the “boom” years in the South Australian economy during 2004 and 2005.
BankSA Managing Director Jane Kittel said the latest results could indicate the start of recovery in confidence following the previous downturn, which was linked to concerns about the local economy and the broader impact of a mining sector slowdown, which seemed to have outweighed interest rate reductions.
“Time will indicate if the latest uplift in consumer confidence is part of a longer term trend, but hopefully this is the start of a move back to more buoyant consumer and business optimism,’’ she said.
“The results show that the increase in consumer confidence is being driven by confidence that the economy will pick up in the next 12 months, as well as there being a greater optimism about employment security and job prospects, household finances and the climate for consumer spending,’’ Ms Kittel said.
Increased confidence is also being driven by a perception of a positive turnaround for small business.
However, the BankSA State Monitor shows consumers remain cautious about making major spending purchases. In other words, the lift in confidence is based on more positive attitudes and perceptions, rather than any significant change in spending behaviour and people are still concerned about high fuel prices, international affairs and the global economy.
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The report suggests that the main drivers of newfound business optimism are businesses benefitting from the lower $AUD, those that stand to benefit from greater government investment in education and disability services and those that will benefit from higher yields and strong commodity prices in the agricultural sector.
There are still concerns in this sector about world affairs, the local economy and lack of new investment, fuel prices and unemployment levels.
“There is a way to go, but with both consumer and business lifting, hopefully they will feed off each other to create sustained, improved trends in positive attitudes that will convert into consumer spending and businesses hiring, upgrading plant and equipment and investing,’’ Ms Kittel said.
BankSA State Monitor surveys 300 consumers and 300 business owners across the State. This month’s survey was conducted between September 10 and 13, following the decision by the Reserve Bank of Australia to keep interest rates on hold at the Board meeting on September 3 and after the September 7 Federal election.
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