The World According to Cachia

Business Confidence is on the rise, and it seems every where you turn there are signs that this is the case.   Reports in the media say that Australian business confidence hit its highest level [July 2009] in almost two years, which suggests an economic recovery is gathering momentum.

This of course is good news which will help the optimists offset the commentary of those who advocate a more pessimistic point of view.

Further good news comes from the fact that the improvement to business outlook will assist those employers who seek to retain their staff despite the downward trend in demand, hence production. 

Although this business confidence is broadly based, reports suggest there are strong signs (specifically) in construction, wholesale, transport and manufacturing industries over recent months.

There are those who are cautiously monitoring this situation suggesting that consumer confidence and therefore spending may weaken. This coupled with low business investment suggest the mid term prospects may not be as bright. Which means it’s important for business not to get too confident.

Take into consideration that over the last few months a number of factors have come into being… including the Government stimulus package and the low interest rates. These factors have now been realised, however going forward there may be no further Government ‘hand-outs’ and the RBA are suggesting the interest rates may rise, as soon as February 2010. Hence the calls for caution may be warranted.

We are however in a better position then some of our allies. In New Zealand the unemployment rate reached a 10 year high of 6% and in the U.S. a reported 371,000 jobs were lost in July, taking their jobless rate to 9.6%

Overall it seems that Australian business have weathered the economic storm relatively well. Yes, there have been restructures and people have lost their jobs, but we see that organisations have developed [appropriate] strategies, new products and markets whilst holding a keen eye on innovation.

I think watch this space is an appropriate perspective as we track along the next six (6) months, and if all the reports are correct, we may well see ourselves and our businesses working in positive territory once again.