Improved outlook amid regulatory concerns
Tony Alexander’s latest survey of 352 businesses revealed declining concerns about interest rates, rising regulatory worries, and ongoing struggles with customer demand and profitability.
Declining interest rate worries
A notable change in this month’s results is the steep drop in concern about interest rates. Once a top issue, it is now less prominent.
Regulatory burdens, on the other hand, are back in focus after easing briefly following last year’s election.
“Concerns about interest rates are falling away quite quickly,” Alexander (pictured above) said, reflecting the impact of anticipated monetary policy easing.
Top concerns: Economy, demand, and profitability
When asked about their primary challenges for the coming year, businesses pointed to economic uncertainty, weakened customer demand, and profitability pressures.
Interest rates have fallen down the list of top worries for the first time in months.
Conversely, issues like currency fluctuations and cybersecurity remain low on the list of concerns.
Workforce dynamics: Skilled labour still a challenge
While businesses report an easing labour market that favours employers, challenges remain in finding skilled staff, especially with young talent moving to Australia.
“Many businesses are still concerned about the loss of young people,” Alexander said.
The survey indicated that staffing needs might surge again if the economy strengthens late next year.
Rising debt and cash flow struggles
Debt levels are increasingly worrying business owners, driven by cash flow challenges and delayed payments. In December, only 7% cited debtor issues, but this figure has since grown to 13%.
“It’s not trending up, but it hasn’t dropped either,” Alexander said.
Business spending intentions shift
Respondents indicated an increased focus on retaining customers, strategic planning, and social media investment. Reductions are expected in machinery purchases, inventory, and climate change mitigation.
Businesses seem cautiously optimistic about the future, with 51% expecting revenue improvements through 2025. Meanwhile, only 1% are likely to boost spending on recruitment, hinting that tight cash flows persist.
Improved morale and staff retention
There are positive signs for workforce morale, with 19% of businesses expecting an improvement in mental health and staff well-being. This is a sharp rise from May’s low of -33%.
“Though conditions remain tough, businesses anticipate a recovery in morale alongside improved economic conditions in the coming year,” Alexander said.
Recovery in sight
As interest rates decline and businesses adjust to regulatory changes, optimism is beginning to take root. Still, lingering cash flow concerns and workforce challenges underscore the need for cautious planning.
The overall sentiment: Business conditions may be tough now, but many are hopeful for a better 2025, the Mint Business Insights with Tony Alexander found.
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