The latest Deloitte’s biannual CFO Sentiment survey reported that only 10% of CFOs feel optimistic about the Australian economy going forward.
Key findings from the survey:
- 50% of CFOs remain optimistic about their company’s financial performance, down from 72% six months ago – and 21% are now pessimistic;
- 85% of CFOs rate uncertainty as higher than normal, down from 92%
- 24% think now is a good time to take on risk – up on the 20% six months ago, but still down compared to the end of 2021;
- CFOs still expect business spending and hiring to increase in FY24, although around 25% now expect this to decrease in the next 12 months, compared to around 8% six months ago; and
- 75% report cost-control as a top focus area.
Commenting on the survey, Deloitte CFO Program leader, Stephen Gustafson, said: “When last surveyed just over six months ago, CFOs appeared to be in two minds. Optimism around business performance was holding, but confidence about the economy was already low.
“Since then, the resilience in business confidence we saw at the end of 2022 has fallen away in response to the more challenging economic environment. The divide between company sentiment, which had been holding up, and economic sentiment, is now closing.
“…net optimism on business performance fell to 29%, compared to 66% six months ago, a lower rate than we saw at the start of the pandemic…CFOs are also no longer strangers to higher levels of uncertainty.
“CFOs still expect capital expenditure, employment and revenue to increase in FY24, although expectations have weakened somewhat, and they are turning their attention to cost control as a top priority to manage any bottom-line impacts.
“On the business-risk ledger, securing and retaining key talent remains the number-one risk. The labour market remains tight, which continues to create challenges for businesses who face a difficult trade-off between attracting and retaining talent and controlling cost growth.
“It’s been a challenging start to 2023, with Australia’s strong post-COVID economic rebound…firmly in the rear-view mirror. The foreshadowed economic downturn from interest-rate rises and mounting cost pressures is here and starting to impact businesses.
“ESG remains a dominant theme for business leaders with increasing pressure to adapt both from within business, as well as externally from public, investor and regulatory demands. Just under 70% of CFOs feel somewhat prepared to tackle their ESG priorities, pointing to Australian businesses still in a period of transition on this front.”
On the matter of new mandatory climate-reporting requirements, 80% of CFOs pointed to these as having a moderate-to-high impact on financial reporting in the future.
Notably, only 13% now believe interest rates will be higher in 12 months’ time, compared to 82% six months ago. Importantly, about 50% believe rates will be lower than at present.