Business Conditions Survey Report: December 2020
The NSW Business Confidence Index reached positive territory in December 2020 for the first time since the June quarter in 2018 (p. 4). This strong performance came before new COVID-19 restrictions were introduced over the Christmas-New Year period. The restrictions are expected to reduce confidence and business conditions,
particularly for affected regions and industries.
The improvement in business confidence in December 2020 reflected growing optimism about the economic situation as major restrictions from earlier in 2020 were lifted. Business communities responded positively to the reopening of both the NSW-Victoria and NSW-Queensland borders, with the heavily impacted Murray and New England and North West regions showing the strongest rebound compared to September.
Each of the key measures assessed in our survey showed improvement. With government restrictions easing, consumer spending continued to recover, helping more businesses to increase sales revenue and profitability. This better operating environment helped more businesses to hire staff and increase capital spending, compared to the
However, full recovery remains a long way off. Businesses continue to struggle financially, with more reporting decreases in staff and reduced capital spending than reported increases. It will require further strengthening in consumer spending for these businesses to operate at a capacity level where they begin to rehire and reinvest. One
quarter of respondents reported a high risk of business failure when support measures such as JobKeeper end.