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Mining, construction struggle in market survey

The mining industry suffered the biggest drop among all industries, with the index decreasing from 4.5 in the June quarter to -15.9 in the September quarter, driven by a decline in demand and commodity prices. 
The construction industry also experienced one of the largest falls in confidence of all industries. The key challenge cited was the lack of preparedness to face future conditions with only 50 per cent saying they are well prepared, down from 64 per cent in June. 
The positive sentiment relates to expectations over the next six months of increased revenue, moderating salary pressures and reduced operating costs.
However, over the past six months a significant proportion of businesses underperformed in terms of revenue and profitability, with 35 per cent reporting falling revenues over the six months to September, compared with just 19 per cent who had anticipated a drop. 
Only 43 per cent of businesses achieved an increase in revenue, compared with 50 per cent that had forecast a rise. 
The index is based on a survey of financial decision makers in public and private companies throughout Australia with a turnover of between $10 million and $100 million. 
It is calculated through the net balance of future business conditions, revenue and how prepared businesses are to meet future challenges.
The index also shows that 36 per cent of businesses expect conditions to improve in the next six months, and only 22 per cent anticipate a decline. 
Top three challenges
At the time of the survey, the top three challenges facing Australian businesses were uncertainty about government policy decisions, weak consumer confidence and a falling Australian dollar. 
Despite these challenges, the index revealed that businesses are better prepared for any fluctuations in business conditions in the next six months, with 47 per cent indicating they are well prepared in the September quarter, up from 44 per cent in the June quarter. 
In addition, more businesses indicated that their business strategy is well defined, the competitive landscape/threats are fully understood and their risk management plan is well prepared. 
?There has been a significant rebound in confidence levels following a period of lower business confidence in the mid-market,? the corporate financial services executive general manager at the Commonwealth Bank Michael Can said.
?This is being driven in part by businesses having better control of costs, which allows them to more effectively navigate market volatility.
?In fact, the index showed that 57 per cent of businesses will place a greater emphasis on cost management initiatives over the next six months while only 43 per cent will focus on growth initiatives.?
Source: The Commonwealth Bank

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