Director Sentiment research summary

The Director Sentiment Index is a survey that looks at both Australian and Global economical and political issues that are important to Australian Institute of Company Directors (AICD) members and the wider director community. It is a comprehensive resource that assesses the opinions and future intentions of directors and their businesses.

As we move into 2017, directors have shown concern for the stability of the global political markets following the results of Brexit and the US election of Donald Trump. The lack of certainty has caused directors to lose confidence in the health of the major global economies. The messy political arrangement in Australia is also largely affecting business outlook, with only 8% of members believing business decision making has been positively affected by the Governments performance over the last year. Further issues such as low productivity growth (26%) and a slowdown in China (25%) have been raised as the main economic challenges that Australian businesses are currently faced with. In the next decade, 38% of directors believe economic policy uncertainty will disrupt their business the most, with political instability (33%) also believed to be a big contributing factor.

Despite the global instability, directors remain positive about business conditions domestically and the overall growth of their business. It seems that directors are keen to get on with developing their businesses further and taking more risks along the way — 34% of directors expect to increase investment and employ more staff in 2017. General business confidence is also at its highest since 2013. With only 18% expecting their business to weaken, the overall optimism that directors are showing proves a positive and encouraging sign as we move into the New Year.

Directors’ priorities for the Government remains the same, with 44% of directors believing infrastructure to be the number one issue that the Federal Government should address. Renewable energy sources and regional infrastructure are the next two highest priorities that they’d like the Government to focus on. Unfortunately, directors are becoming increasingly pessimistic about the effect of the Federal Government’s current performance, with almost 80% believing the performance had a negative effect on consumer confidence. 75% of directors are equally pessimistic about the state of the current AGM system, with sustainability and long-term growth prospects considered to be the major issues that directors are most concerned about.

With so much global uncertainty and instability, it comes as no surprise that directors are concerned about these issues having a direct impact on their business over the coming year. Despite the many challenges that they face, it seems directors aren’t willing to wait for global Governments to get their act together and are getting on with the job.