Mining morale sinks: study

MINING was found to be among Australia’s least confident industries in the September quarter, according to a study by Commonwealth Bank.

Commonwealth's future business index charted mining industry confidence at -15.9 in the September quarter compared to a score of 4.5 in the three months to June, due to a decline in demand and commodity prices.

Construction was also found to be one of the least confident sectors in the September quarter (down 13.4 points from June) with survey respondents citing a lack of preparedness for facing future conditions as a key challenge.

The results were contrary to the nationwide trend of improved confidence following a period of depressed sentiment.

Overall, the index indicated that confidence more than doubled to 10.8 versus a reading of 5.2 in the June quarter on expectations of increased revenue over the next six months, moderating salary pressures and reduced operating costs.

The streamlining of businesses due to economic pressures was flagged as a driver in the return of confidence.

"The findings reveal that businesses are now better prepared to ride out any ongoing economic instability and this has helped boost business confidence in the mid-market," Commonwealth economist Diana Mousina said.

"That said, global economic factors are still impacting business' outlook, particularly any economic slowdown in Asia.

"A growing number of organisations are also looking at strategies to capitalise on an Australian dollar that has fallen from its recent highs, with a large proportion seeking to increase exporting activity."

Despite the fall-off in resources industry confidence, the major mining jurisdictions held some of the top positions in a state-by-state analysis.

Queensland returned as the most confident state with a modest increase in confidence during the quarter of 2.3.

Western Australia, meanwhile, experienced a substantial improvement in confidence, with the index increasing from zero in the June quarter to 11.3 in the September quarter.

WA firms were also well prepared to address future volatility with 90% of businesses having costs well controlled and 87% reporting that they have a well-defined strategy.

The index was calculated through the net balance of future business conditions, revenues and how prepared businesses were to meet future challenges.

At the time of the survey, the top three challenges facing Australian businesses were uncertainty about government policy, weak consumer confidence and the falling Australian dollar.


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