The Chamber of Commerce and Industry Queensland (CCIQ) has released its CCIQ Pulse Survey of Business Conditions for December quarter 2020, and it shows a continuation of the recovery in the second half of 2020 in business conditions and confidence (see chart below). That’s consistent with what we know from ABS data and other surveys. The 12-month outlook for Queensland businesses is actually higher than it was at the end of 2019, although the high degree of sampling error in the survey should be acknowledged, as should the outlook measure still being below the neutral level of 50.
Importantly, the report (on p. 13) also shows that a minority, but apparently a sizable minority, of Queensland businesses remain concerned about the future, and I suspect many businesses are very concerned about what happens when JobKeeper ends in late March:
At the close of 2020, businesses are mostly optimistic for their ongoing sustainability when stimulus support ends. Following a mostly positive December quarter, the proportion of optimistic respondents grew to over two thirds (67%). This finding does not suggest that challenges aren’t still present. There remains 32 per cent of businesses that believe their operation may cease in 2021 due to persisting challenges stemming from the COVID-19 crisis. [emphasis added]
That’s very concerning. While it’s expected the economic recovery will continue in 2021, there is no doubt that there is a lot of uncertainty regarding what happens when JobKeeper ends, particularly whether consumers and businesses will spend a good fraction of the $200 billion of savings accumulated during the pandemic.
Over the next few months, the insolvency statistics will reveal just how much financial damage has been done to businesses across Australia. I’m particularly concerned about those in Queensland’s regions most dependent on international tourism, such as Cairns and the Whitsundays. In a recent LinkedIn post, former CCIQ Chief Economist Dr Marcus Smith observed:
The number of business insolvencies fell dramatically over the period of the Federal Government’s moratorium to December, but is the honeymoon over?
Insolvencies started to tick up at the end of 2020, as Marcus showed in charts of ASIC data he posted earlier today (see chart below). We expect to see many more over the coming months.
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