Change for the better

The unexpected fall in levels of unemployment serves as a change for the better for business owners to invest in new car and technological upgrades, while delaying taking on more staff until there is real evidence that the business recovery has arrived.

The “cash splash” in Wayne Swan’s budget and the handouts across the nation prior to the coming of that carbon tax is designed to encourage retailers and businesses to put on a happy face. Despite the deferral of the marginal cut to corporate tax, the flow of end of year taxation benefits to family budgets will generate good prospects for smart companies.

A recent survey of business brokers in the US by BizBuySell found that 54% of respondents said that business-for-sale market conditions have improved in the first quarter of 2012; 58% of those surveyed said they expect that conditions will continue to improve throughout the year.

Chief economist for the National Federation of Independent Business (NFIB) William C. Dunkelberg reports upon an increase in the number of interested buyers of small business, along with an easing of lending restrictions that is making it easier for buyers to get financing.

“Overall, the April NFIB survey anticipates some strength in the job creation number with little change in the unemployment rate. With job creation plans rebounding, the outlook is a bit more optimistic for the second quarter, but it’s important that we not get ahead of ourselves,” said Dunkelberg.

A survey by the National Federation of Independent Business reports a slight increase in hiring among its membership and 34% business owners reported that they could not find qualified applicants hit. “The ability to find qualified applicants for available jobs continues to be a problem for many small business owners,” says the NFIB. Hard-to-fill openings are a strong predictor of the unemployment.

Similarly in the UK, BDO’s Optimism Index, which points to business performance two quarters ahead, has surpassed the crucial 95.0 mark that indicates growth, with a reading of 98.0 for February – the highest in nine months. This represents a huge jump of 3.9 points, the single biggest monthly increase since December 2009. It is the first time the index has topped 95.0 since last year and demonstrates a considerable improvement from earlier in the year. The UK’s overall economic recovery, the upturn in business confidence is broad-based. In the services sector – which accounts for roughly 75% of the UK’s output – optimism is especially marked and comfortably exceeding the 95.0 growth threshold. Similarly important for the UK, BDO’s Manufacturing Optimism Index jumped to 96.9 in February from 91.3 the previous month.

It is encouraging to see British business confidence improving significantly for the second consecutive month. Increasing optimism across sectors like manufacturing and the all important services sector is particularly welcome.

Gary Morgan says that consumer confidence in Australia is still impacted by increasing worries about Australia’s economy despite the RBA’s 50 basic points cut, with a third of Aussie households (up 5%) expecting “bad times” for the Australian economy over the coming year. “Roy Morgan Consumer Confidence has fallen 2.1 points to 110.3 despite the RBA’s 0.5% cut to interest rates last week. Consumer Confidence was measured before Treasurer Wayne Swan delivered this week’s federal budget.” (For full details click here.) 

All this needs to be set against the relatively low risk of the cross bench deciding to bring on an early election by throwing Peter and Craig out of the house to give Tony Abbott his anticipated autumn take over of the Treasury benches. Most smart companies expect to be more successful in the upcoming year with earnings rising faster than revenue. The fall in the gold price and the slight fall in the Australian dollar can now be taken as evidence that the benefits of the budget justify a revival in innovation and development.

Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.