TASMANIAN business confidence continues to improve as the worst recessionary fears are not realised, but economic conditions are still difficult and the recovery is expected to be weak.

This is the outcome of the latest quarterly Survey of Business Expectations undertaken by the State’s peak employer organisation the Tasmanian Chamber of Commerce and Industry (TCCI).

The result represents the third consecutive quarterly rise in business confidence, lifting Tasmania from the previous lows of early 2009. The Tasmanian Index has risen from 48.4 points to 55.3 points, its highest level since June 2004 and the first time it has risen above 50 index points since June 2008.

However, Tasmanian business still feel less confident about the local economy compared with the national outlook with the State Index trailing the national Index which rose from 54.2 points to 62.1 points.

TCCI chief executive Robert Wallace said the upward movement was welcome with the clear expectation on the part of business that the national and Tasmanian economies would strengthen over the next 12 months.

But Mr Wallace said while this was encouraging, the indicators were still signalling that business conditions remained very difficult and the recovery would be weak.

“While sales revenue and prices were expected to increase in the March quarter, export activity was predicted to weaken because of the higher Australian dollar,” he said.

“Tasmania is very much an export-orientated economy and businesses in this sector are feeling some pain.

“Wage costs will remain steady, but employment levels are still in negative territory and investment in buildings and plant and equipment is expected to weaken in the March quarter.

“This is a key concern and will inhibit the speed of our recovery.”

Mr Wallace said skills shortages continued to be the biggest constraint on Tasmanian business, followed by wage and non-wage labour costs such as payroll tax and workers’ compensation. Rising energy and insurance costs were also placing added constraints on business.

“Global recessions will come and go, but the long-term challenges for our economy will still be with us.

“The focus must remain on making Tasmania an attractive and cost competitive place for investment and to do business.

“Undoubtedly, business will be looking for policies designed to achieve that important outcome as we approach the March election,” Mr Wallace said.