Queensland CEOs are less confident in the economy now than they were three months ago, but are still more bullish than they were in 2009.
According to a survey commissioned by the CEO Institute, only 58% of respondents agree that the economy is heading in the right direction, down from 82% in the previous quarter.
And just 49% of respondents expect higher profits in the next six months, compared to 56% in March. Around a quarter expect their profits to be lower.
But expectations of increasing investment, employment and profitability are holding steady, with 61% planning to employ more people in the next six months, and an equal percentage expecting to invest more.
The CEO Institute's CEO financial index – a measure of confidence in the economy and profit expectations, as well as employment and investment expansion plans – fell to 33, down from 45 in March but above the 30 from the first index in December 2009.
“The mood of CEOs was quite upbeat in the first two quarters of this year and while confidence about the economy appears to be on the wane, respondents still expect their own businesses to be fairly robust for the next 6 months,” said Sue Forrester, Queensland CEO of the CEO Institute.
But she warned that issues CEOs had to face during the global financial crisis were beginning to re-emerge, although it was unclear whether this trend would continue.
“Our next quarterly report should show whether confidence in the future of the economy picks up or whether business behaviour adjusts down to fit expectations. If it’s the latter, we may see the economy cool,” she said.
The largest number of respondents – 24% - pointed to the federal election as the biggest single potential impact on their businesses, followed by the mining tax at 16%.
Even some companies not in the mining business were concerned over the mining tax, with some saying it could set a precedent which may lead to other industries being singled out, and that it could create investor uncertainty, which is bad for the overall economy.
That said, respondents were fairly evenly split over whether the mining tax was a good idea. No position received more than 50% of support, but overall 42% agreed with the tax and the principals behind it, while 35% disagreed.