Consumer Confidence Vs Business Confidence

Consumer confidence: is an economic indicator which measures how optimistic consumers

feel about the economy and their own financial state through their activities of saving and spending, a very important tool that can be supplied to you by a performance accountant.

It basically means that if people feel financially stable at work and home they spend more.

Most financial articles generally refer to US consumer confidence. The US Consumer Confidence Index is put together from monthly surveys of 5000 American households. Country by country, it varies hugely around the globe.

Why You Need a Performance Accountant:

Business Confidence: measures how businesses feel about their financial state.

Business confidence in New Zealand generally refers to the results of the monthBusiness Outlook survey which is put together by the National Bank in New Zealand, and surveys 1500 businesses nationwide. The survey asks questions about the business' opinions on what will be happening in the 12 months in areas like interest rates, unemployment, investments and exporting.

Why You Need a Performance Accountant: Knowing How To Use Indicators Properly

How they apply to your own business

Consumer confidence can help you decide whether to keep high-value items in stock, outlay cash in advance or take risks. Decreasing it may give you pause over whether a business decision will pan out well. On the other hand, rising consumer confidence may be the ticket to launching a new product or service.

However, keep in mind that consumers do not necessarily have a good grasp of economics. Although levels of consumer confidence may be a good indicator, it's not advisable to rely on it for major business decisions. And while the New Zealand scene is influenced by US trends, consumer confidence here may respond to local factors as well.

Hiring a performance accountant would help you in analyzing your consumer confidence report better. With a performance accountant, you can interpret it in a way that would spell more positive business growth.

What Your Performance Accountant Can Help You Put Together

Similarly, business confidence reflects the opinions of business owners. It too needs to be taken with a grain of salt. However, if you track it over time, you can develop a good feel for economic trends across various industries and how they relate to your own.

For example, an increase in business confidence in the construction industry could be good news to a joinery business while one in manufacturing might be of interest to someone in transport and distribution.

Indicators such as consumer and business confidence give us an idea of economic trends internationally and at home. It can be useful to monitor them although unwise to base specific business decisions on them, or get spooked by their results. As usual, your best tools are a practical approach and a good business advisor, such as a performance accountant.

by: Jamie McKean

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