The Australian Chamber of Commerce and Industry (ACCI) reports that the October 2009 ACCI Survey of Investor Confidence shows that business' actual Own Conditions, Sales and Profitability continued to deteriorate over the September quarter, yet looking ahead signs of recovery are evident in all expectations indicators for the next 3 to 12 months. Business expectations are back to 2007 levels.

However the ACCI said that the upsurge in expectations should be interpreted with care given actual conditions often fall short of projections, as evident in the record low levels of Actual Sales Compared with the Level Expected Six Months Ago and Actual Profits Compared with the Level Expected Six Months Ago indexes.

This improvement in business confidence appears to be having a positive effect on firm-specific investment intentions, with the Own Business Expected Level of Investment and the National Expected Business Investment indexes recovering from their historically low levels, albeit the former remaining in negative territory.

The index of Expected Number of Full-Time Employees remained in contractionary territory, however this index also shows signs of improvement. Businesses' own full-time employment expectations continue to be weak over the next six months, albeit with an improvement in hiring intentions.

The survey also gauges the sensitivity of investment to potential barriers. Highlighting the impact of the credit squeeze, financial constraints continue to act as significant impediments with Insufficient Retained Earnings becoming the fifth largest constraint on business investment, its highest ranking since the survey began in 1998.

13 October, 2009