35% businesses see difficulty meeting financial commitments; 23% cut capex
The separate ABS COVID business survey for August showed the very negative impact of COVID and mobility restrictions on the outlook for business investment and the economy. A 35% share of all business expects that meeting financial commitments over the next three months will be either difficult or very difficult. Indeed, small businesses (0-19 persons) and medium-sized businesses (20-199 persons) are ~twice as likely to face difficulty (35% and 33%), compared with large businesses (18%). Meanwhile, compared with three months ago, 23% of businesses decreased or cancelled their actual or planned capex; while another 37% had no actual or planned capex. The largest factor cited as driving capex decisions is future economic uncertainty (59%). However, on the positive side, the share of business reporting a fall in revenue compared with the last month improved from 47% in July, to 41% in August, and is expected to recover further to 28% in September – albeit still a large number.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
