REPORT FINDS BUSINESS CONFIDENCE AT A THREE YEAR LOW

SYDNEY; Tuesday October, 2011 – Low business confidence is driving companies to reduce staff, down grade growth forecasts and increase prices, according to Newport Consulting’s annual business survey of 242 Australian and New Zealand business leaders.

The report, “Managing in a multi-speed economy: Current State of Play”, found heightened unease in the business community with 28% of surveyed Australian companies expecting difficult conditions in 2011–12, up 11% on last year. 14% of Australian companies expect no growth at all this financial year, up from only 6% last year. And only 15% of companies are very optimistic about their growth expectations which have noticeably fallen from 39% last year.

Newport Consulting’s Managing Director, David Hand, notes the significant change in the business community’s mood over the last three years, since the report’s inception.

“Companies are far less optimistic about the prospects for the economy as well astheir individual business this year compared to the last two years,” David explained.

“This year, Australian companies plan to reduce staff – a strategy which has been missing from the management agenda for the last two years. Companies are also demonstrating great caution through their management strategies with operational performance, cost control and productivity rated as top priorities for business leaders.”

We found a marked difference in sentiment between the resources sector and other respondents. In resources, a shortage of skilled people is a major issue whereas other sectors such as manufacturing, retail, and transport and logistics, are now seriously considering reductions in staff or a further shift towards casual workers in the face of growing uncertainty in the economic outlook.

The report further found that business leaders are most worried about the state of the economy (53%), followed by cost management (51%) and recruitment and retention (44%). Capital expenditure is not an area of concern or focus for 43% of companies.

David says, “This further indicates a lull in business confidence and strongly signifies companies are less willing to invest in capital projects given their concerns about the state of the economy”

One encouraging finding that emerged from the report is innovation is back on the agenda as business leaders plan to grow through development of new services or products. Further, the top three identified opportunities for business leaders for the financial year ahead are skills development (58%), customer satisfaction (58%) and productivity (51%).

“While it is encouraging to see productivity on the business agenda, our data suggests that productivity is not actively been addressed at a micro-economic level. Although 85% of surveyed companies said that they would be more productive this year, 41% of companies rated productivity as only somewhat of a priority meaning that it lacks decisive and dedicated action. It is also worrying that productivity has slipped from the third largest source of growth last year to seventh place this year”.

“Far more needs to be done at an organisational level to lift productivity in order for Australia to meet the productivity challenge and overcome future economic difficulties” David adds.ENDS

About the Report - “Managing in a multispeed economy: Current State of Play” report is an annual study which tracks business confidence and management behaviour of Australia and New Zealand business. The sample comprised n=242 business leaders from SME to large companies who participated in an online survey between 1 June and 30 July, 2011. Survey respondents participated anonymously and represented listed, private and government organisations. For a copy of the full report – please contact Gemma from Manning & Co. Newport Consulting (www.newportconsulting.com.au) is an operational management consulting company that assists organisations to improve their business productivity performance. Newport was founded in 2006 by David Hand, one of Australia’s leading operational improvement experts. Newport consultants have worked in key industry sectors with some of Australasia’s leading companies.