ECONOMIC OPTIMISM SET TO BOOST COMPANY SPENDING
19 April 2016,
AUSTRALIA'S largest companies have a renewed sense of optimism for the economy and plan to spend big this year to facilitate growth, a new study reveals.
The American Express/CFO Research Global Business and Spending Monitor shows 64 per cent of CFOs anticipate economic growth in Australia over the next 12 months, with 81 per cent indicating they will increase investment as a result.
More than a third of CFOs say their company's level of spending and investment will increase by more than 15 per cent this year.
American Express director Robert Gunning says the results paint a different compared to a year earlier, with companies responding to the favourable conditions.
"Last year, Australian big business had applied the brakes to their spending; with Australia the second most reluctant market in the Asia Pacific region to aggressively invest behind Hong Kong," Gunning says.
"This year, it's a different story. CFOs from big business are realising that to remain competitive with other companies, enter new markets and better meet customers' needs, they need to relax their corporate purse strings and they're doing just that."
Sales and marketing will be the main area of investment, followed by improving production process efficiency and adding capacity for production or service delivery.
Gunning says strong projections of sales growth, particularly domestic and Trans-Tasman sales, could also be contributing to increased investment this year.
"While CFOs are looking for customers on their own doorsteps first and foremost, they're also increasingly looking abroad for fresh opportunities for expansion," he says.
"In fact, around three quarters of CFOs say exports will be more important for their company's growth this year compared to 2015 - with most looking to China, a sign that nervousness around China's economy is not a deterrent."
The survey revealed 30 per cent of respondents would boost spending on labour this year, compared to 19 per cent who plan to lower expenditure.
Around 20 per cent of companies expect their workforce to grow by more than 15 per cent, particularly management positions, skilled workers and IT staff.
"A third of CFOs said they'd be willing to offer flexible work schedules and an improved working environment to recruit the right candidate," Gunning says.
"When job seekers are considering one role over another, often it can come down to those companies that have a more progressive approach to their HR policies.
"CFOs know that having plans to grow their business will only be realised if they have the best team behind them."
Senior finance executives from companies with revenues exceeding US$500 million took part in the survey.