Executive Outlook 2021 (results are in)

Executive Outlook is an exclusive brand of Top Office Group, and a passion of mine for 13 years. We talk with real people asking real questions, and take the pulse of business leaders across our region.  No other survey gives such a detailed analysis of business sentiment, matched against broader trends.

Each week, I will post a series of short highlights and ideas, to help your business prosper (starting with confidence levels). We’d love to hear your views.

After 18 long months of start, pick up the pace, pause, step back, go again, the tide is turning.  Overall, local businesses have rebounded robustly.  We’re in an incredibly high-growth corridor, with $885 million in the DA pipeline with Ipswich City Council.

Executive Outlook found 78% of business leaders are optimistic about trading conditions, off the back of solid profits and activity.  At the same time, 22% of leaders shared concerns about the outlook, with good reason.

Whilst many businesses are booming, those exposed to COVID restrictions, supply chain backlogs and prevailing policies of the day have taken a hit.  As such, our findings are almost polarising across different sectors, and show a multi-tier economy.  This is the underlying theme of our research.

Here’s what’s thriving.

Houses have surged by over 20% in the past year, demand has outstripped supply. That’s epic. The worry is that debt may climb too far above income growth. The regulator, APRA now require banks to test how much debt buyers can service if interest rates rose by 3% to cool the market, with less credit available to buyers.

“Semi-rural properties are in high demand with different streams of buyers: Families who now work from home, interstate migration and the return of investors (coupled with huge interest from Asian buyers, once borders open)”. 

Commercial agents we interviewed have written 18 consecutive record-breaking months for sales and leasing of retail and industrial property in the Western corridor (excluding Brisbane’s CBD). This is off the back of record low Interest rates and phenomenal interstate migration (30,000 people in 2020, and trending up).  The genie’s out of the bottle.

“Any well-presented listing in a good location is selling like hotcakes”.

This has flowed on to service providers, medical centres, accounting and legal professionals, food and retail outlets across the region.

Rising pressures on our health system make headlines every day. Demand for Aged Care services is not far behind. Our interviews show endless demand for businesses in healthcare, disabilities, aged care and financial supply chains (no sign of meltdowns here).

Transport, deliveries and logistics sectors have performed strongly, with the shift to online sales.  Australia Post is a shining example, recording growth of 15.5% year-on-year.

IT sectors powered ahead during COVID, in our quest to go remote, just to survive.  The pressure on leaders was intense, to act fast, adapt and invest in technology to boost productivity.

“Covid has hastened automated technology, and brought plans forward”.

Some Qld manufacturers, along with their local supply chains, are thriving, to bring home the story of local manufacturing.  It’s a different story for importers, exporters and manufacturers, reliant on global supply chains.

CCIQ’s latest survey shows Qld business confidence has rebounded from the worst lows of 2020.  However, three in five businesses think the economy will contract further over the next 12 months. Over half of all businesses reported weaker profits in the September quarter, compared to the previous one.  All indicators show improvements for December’s quarter.

Our survey showed that the massive injections of COVID induced Government stimulus helped drive confidence, hiring and investment activity in the region.  This has buffered our economy, resulting in record profits across many sectors and close to full employment (but it still feels artificial).

“Businesses are selling at prices never dreamt of, driven by cheap capital and easy access to it. Demand, turnover and profitability are strong across most sectors. However, it’s a false paradise that comes with an end date”.

 To read the play, if our two biggest superpowers catch a cold, so do we.

 Many trillions of dollars have poured into world economies by central banks (reportedly $834 million per hour).  Quantitative easing’s back in vogue.  There’s a view that the US will chart a course of inflation to deal with a surge in debt levels ($29 trillion’s a lot).  We’re likely to see contradictory forces of inflation and deflation at the same time.

Chinese property developer, Evergrande, are in the hole for over $300 billion. That’s epic. If this property bubble bursts, China may choose to pump more loans into the system to create jobs and keep the market afloat. It matters because China accounts for almost 20% of global GDP, and whilst these speculative risks are contained, it’s not great for foreign investors (and has a sub-prime feel to it).

We’re watching the formation of new alliances jockeying for position across the globe (just a tad unsettling).  The backlash to vaccine mandates has seen signs of civil unrest.  So, looking at the bigger picture, we are living through one of the most disruptive periods in history ever.

Next edition: What’s keeping local businesses awake at night?

Compiled by Jan Gadsden, Founder of Top Office Group Pty Ltd.