Report highlights the resilience of Australian businesses
Businesses in Australia are navigating a period of slowed consumer demand but remain cautiously optimistic as they enter 2024, according to Westpac’s latest Quarterly Business Snapshot.
The report, which draws insights from millions of daily business banking transactions and surveys from SME leaders, indicates that easing cost and inflationary pressures, combined with strategies to cut business expenses, are helping to counterbalance the drop in consumer spending.
Anthony Miller (pictured), chief executive of business and wealth at Westpac, said that despite the economic slowdown, Australian businesses are well-equipped for the upcoming year.
“The resilience of Australian businesses and their ability to adapt through various setbacks over the last few years is impressive,” Miller commented.
“While we recognise there are businesses navigating challenging circumstances, our customer data shows many have been able to manage costs to offset any reduction in turnover. When combined with reduced debt levels or large cash buffers built up during the pandemic, you can see how this is helping to position them for new opportunities as we move into 2024.”
The Westpac report also revealed an improvement in business cash flow and debt servicing costs across most industries during the December quarter, with retail, wholesale trade, manufacturing, and business services sectors showing notable performance.
Essential industries such as health and education, buoyed by rapid population growth, have seen better business turnover, whereas property services, education, and construction faced a decrease in cash flow in the same period.
Meanwhile, business goals for the coming year vary by company size, with 92% of leaders from businesses employing between 20 and 200 people planning to invest and expand. In contrast, 43% of smaller businesses, with 20 employees or fewer, aim to maintain their current operations.
Besa Deda, chief economist at Westpac Business Bank, forecasts a year of two halves for 2024.
“Over the first half of the year, cash flow will continue to be supported by a moderation in inflation,” she said. “However, consumer spending will only make a sustained recovery when household finances improve in the second half of the year, on the back of the tax cuts which come into effect from July 1. Possible rate cuts from the Reserve Bank in the second half may also help prop up spending.”
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