March Quarter Overview
Improved outlook on the horizon for Queensland businesses
Latest results for the Pulse Survey in the March Quarter indicate that Queensland’s business community has potentially turned a corner with an improved outlook on the horizon. Noting that this improvement comes from a low base and actual business performance continues to remain well short of where needed.
Confidence improved in the March quarter with Queensland businesses anticipating a gradual strengthening in the national and Queensland economies over the next 12 months but business performance during the March quarter, while improved, is yet to reflect actual growth.
General business conditions and total sales revenue improved during the quarter. However, considerable increases in business operating costs coupled with rising labour costs offset this improvement and as a result business profitability only marginally improved and is not yet at profitable levels.
Actual growth is anticipated to occur in the June quarter with expectations for general business conditions, sales and employment all registering strengthening PBIs above 50 index points. However, it will take longer to see substantially improved profitability.
In summary, this quarter’s results, whilst reflecting volatility, are promising in that they signal a consistent pathway towards an improved economic outlook for Queensland. The challenge will be Queensland businesses’ ability to navigate through an extremely complex array of issues as indicated by Pulse businesses including:
> Uncertainty emerged with the upcoming Federal Election
> Direct and indirect loss of trade and physical damage from the Queensland floods
> The labour shortage of skilled and non-skilled employees; exacerbated by ongoing housing and accommodation crisis
> Continuing supply chain disruptions leading to stock and material shortages, compounded by geopolitical uncertainty especially in Russia and China
> The re-emergence of inflation and the expected rising interest rates that may impact consumer confidence and spending, as well as business costs and contracts
> Rising fuel prices that are increasing business costs and also impacting customer budgets
> The lingering effects of COVID-19 on events tourism
However, there are also favourable influences
> The large scale winding back of COVID-19 restrictions
> The re-opening of interstate and international borders which will have meaningful impacts on tourism but also population growth and skill shortages
> Favourable commodity prices for Queensland exports
> Emerging post COVID-19 positivity across businesses and the community.
A better economic outlook is clearly evident in these results with greater improvement in business confidence of achieving business goals and the easing of many business constraints, particularly around economic demand and activity.