Though business confidence in the Australian economy moderated over the June quarter, businesses remain pessimistic, a new survey has found.
The Australian Chamber of Commerce and Industry Business Expectations Survey for the June quarter revealed that business expectations for the Australian economy over the next 12 months dipped 1.5 points to 41.6 on a trend basis.
This marked the fifth consecutive fall, but indicated a slowing rate of decline. The volatile seasonally adjusted measure showed a 0.4 point rise in expectations to 42.7.
The persistent pessimism extends to businesses’ assessment of their own conditions, which fell for the fourth consecutive quarter, to 40.4 on a trend basis. However, the index increased 1.3 points to 41.5 on seasonally adjusted basis.
ACCI CEO Kate Carnell said the Federal Budget was a good one for businesses, particularly small businesses.
“But it is taking a while for that to filter through to business expectations, Ms Carnell said. “The ACCI Business Expectations Survey demonstrates that confidence remains fragile and the economy is facing significant headwinds.”
Businesses reported deteriorations in sales revenue, selling prices, profits, employment, overtime utilisation, investment in buildings and structures and investment in plant and equipment amid rising wages and non-wage labour costs.
However, export sales increased for the second consecutive quarter, suggesting Australian exporters are beginning to benefit from the falling Australian dollar.
Looking ahead to the September quarter, businesses are expecting an improvement in general business conditions, specifically sales revenue, selling prices, profits, employment, investment in buildings and structures and investment in plant and equipment.
Wages and non-wage labour costs are expected to subside.
Deteriorations are expected in export sales and overtime utilisation.
Tim Hicks, Senior Manager of Economic Policy at ACCI, said: “The headline figures were quite negative, but trend data can be slow to adjust to sudden changes, like new budget measures. So there is some comfort in the fact that the seasonally adjusted results show improvements in business perceptions of the economy and conditions within their own business.”
The ACCI Business Expectations Survey for the June quarter gauged the views of 2,594 businesses of varying sizes, across all mainland states and all major industry categories.
It tracks businesses’ expectations for the Australian economy over the next 12 months, businesses’ expectations for their own performance over the next quarter, and businesses’ assessment of their performance over the most recent quarter.
All indices run from 0 to 100, with a score of 50 indicating an even balance of positive and negative responses.