Sensis survey makes grim reading for transport and storage


Small and medium firms in the sector struggle while others see confidence in minor slip but still near decade high

Sensis survey makes grim reading for transport and storage
From a financial perspective, the Sensis report is depressing

 

Small to medium transport and logistics businesses remain in difficult financial times, according to the quarterly Sensis Business Index March 2017.

The Sensis survey is of 1,010 firms across a range of industries and not counted as being in ‘the big end of town’ and stands in contrast to the previous quarter’s note of confidence.

It sees ‘Transport and Storage’ firms amongst those struggling most, with performance and expectations regularly less than the median and often at the bottom of the lists.

While overall confidence was seen at the second-highest level for the decade, relatively low scores were recorded in Wholesale Trade (down seven points to +31); Transport and Storage (down 11 points to +24); and Retail Trade (up nine points to +23).

But this serves to obscure somewhat certain quite concerning details.

Profitability results were up last quarter in Wholesale Trade (+15); Health and Community Services (+10); Finance and Insurance (+4); and Communication, Property and Business Services (+2). But Transport and Storage (-23) struggled the most, followed by Hospitality (-13), with negative balances also seen in Manufacturing (-10), Retail Trade, Cultural, Recreational and Personal Services (-6), and Building and Construction (-6).

Profitability expectations for the present quarter are negative in Transport and Storage (-12), but positive in all other sectors, ranging from +7 in Retail Trade to +28 in Health and Community Services.

Unsurprisingly, it was a similar story in sales, where last quarter negative net balances were seen in Transport and Storage (-9); Hospitality (-7); Manufacturing (-3); Retail Trade (-2); and Cultural, Recreational and Personal Services (-1).

Current quarter sales expectations are thankfully better, with Transport and Storage (+4) and Retail Trade (+8) joining Hospitality (+1) with single figure balances. But this compares with Building and Construction (+30); Manufacturing (+26); and Communication, Property and Business Services (+22).

Employment expectations are consequently grim if bottom-rung positive at +1, compared with other laggards in Hospitality (+4); Building and Construction (+4); Retail Trade (+2); Cultural, Recreational and Personal Services (+2); and Communication, Property and Business Services (+1).

Almost half (46 per cent) of all surveyed firms reported barriers to taking on new staff. This was 40 per cent last time. Lack of work or sales again stood out among the barriers mentioned, mentioned by 36 per cent, which compares with 39 per cent last survey.

For last quarter wages growth, the balances ranged from a low of +3 in both Manufacturing and Transport and Storage to +15 in Cultural, Recreational and Personal Services. Double figure growth also occurred in Wholesale Trade (+14); Building and Construction (+13); and Health and Community Services (+13).

Wages growth this quarter is most likely in Building and Construction (+23); and Health and Community Services (+23). The likelihood of lifting wages is lowest in Wholesale Trade (+4); and Hospitality (+4), followed by Manufacturing (+5); and Transport and Storage (+5).

For prices last quarter, a six point lift in the net balance to +18 makes this the highest score since December 2008 when it was +22. Price increases were indicated by 22 per cent, with 4 per cent reporting falls.

Health and Community Services (+28); Cultural, Recreational and Personal Services (+27); Communication, Property and Business Services (+24); and Hospitality (+21) displayed above average price growth. The lowest balances were in Finance and Insurance (+5); Manufacturing (+9); and Transport and Storage (+10).

The net balance for prices this quarter increased 10 points to +22. Last March this indicator was at +19. The last time expectations recorded a net balance of +22 was in December 2012.

Meanwhile, Sensis this quarter measured small to medium businesses’ assessment of federal government policies, and while the most positive sector was Finance and Insurance (+13), followed by Communication, Property and Business Services (+8), the most negative sector was Manufacturing (-16), followed by Transport and Storage (-13); and Wholesale Trade (-13).

Those firms with an unfavourable opinion of the Federal Government’s policies cited excessive bureaucracy and red tape (21 per cent), ahead of there being too much focus on big business (13 per cent).

The top three reasons among those with a positive response were a perception the Government is being supportive and interested in small business (14 per cent), tax incentives (10 per cent) and efforts to reduce tax (8 per cent).

"When we look at the key indicators, sales, employment, wages and prices are all positive, while profitability has also improved, despite still recording a negative score," Sensis CEO John Allan says of the big picture.

"When you mix these results with the fact that business confidence remains at one of the best levels we’ve seen in the past seven years, it’s not surprising to see the long-term economic sentiment improve.

"Businesses are expecting a solid increase in prices this quarter, which may give inflation a push, helping the Reserve Bank to justify a rate hike at a time when everyone is keenly watching their every move."

 

You can also follow our updates by joining our LinkedIn group or liking us on Facebook