Business leaders’ confidence down
The CEO Confidence Index has retreated from its positive bounce back in Q3, dropping from 113 to 101 in Q4, while business confidence in the economy has now entered the negative territory, with expected economic growth falling by 18 points to 89, according to The Executive Connection CDEO Confidence Index, December 2019.
Also, the optimism of small and medium enterprises (SME) business leaders stalled at just above the positive/negative level at 101 in the December quarter.
This year’s reading of the index remained in stark contrast to the December Quarter 2018 when CEO’s perceptions of the economy’s performance sat at a high of 130.
According to Warren Hogan, The Executive Connection’s Chief Economic Advisor and Industry Professor at the UTS Business School, the post-election bounce in CEO confidence faltered in recent months.
“Business confidence has reversed the rise witnessed through the middle of 2019 and is now only just sitting in positive territory with an Index reading of 101,” he said.
“Expectations for the economy are a critical element in business planning, and this quarter we’re starting to see signs of these concerns appearing. After a period of cautious optimism, CEOs are looking to economic indicators to direct business expenditure and investment,”
Another factor was that the monetary policy was no longer seen as effective, with 73% of CEOs saying that they did not believe further interest rate cuts would have an impact on the economy.
While SME access to finance remained steady in the last three months for the majority of businesses (66 per cent), one in four cited that access to finance became harder in the last quarter, the research found.
“Fragile confidence in the economy has not impacted the size of the workforce, with most businesses expecting to invest and hire staff in the year ahead. This is consistent with a stabilisation in the broader economy, with an uptick in property prices, tax cuts landing, and record-low interest rates steadying the ship as we approach 2020,” Hogan said.
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