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Capital investment falls ahead of budget

Capital investment falls ahead of budget

Fall, arrow, down, red

Capital investment by SMEs took a dive in the first quarter of 2018, suggesting businesses are waiting to see whether speculated tax cuts materialise before committing to new investments.

The My Business SME Sentiment Index saw a fall of almost eight points compared with the December quarter, down to 18.84.

The result was also down slightly on the 20.13 points recorded in the same quarter last year. A reading above 0 on the index indicates growth.

It also follows the fall recorded in business expectations of profitability, despite most business leaders forecasting revenue growth.

If previous results are anything to go by, the current quarter will continue to fall dramatically — as can be expected for the quarter when the federal budget is announced, as well as the being the final quarter of the tax year.

The real test of SME capital investment plans will be from the September quarter, once any new tax cuts or business incentives are likely to have come into effect and the new financial year kicks off.

 

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Capital investment falls ahead of budget
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