Confirms the trend of gradually improving near-term indicators, but with a somewhat patchy longer term outlook
Business confidence for Q2 is 4 vs. prior 0
- Business confidence is at its highest level since Q3 2014, & consistent with the long-run average for the series
Business conditions for Q2 is 4 vs. 3
- Business conditions were also marginally better in Q2, and above the long-run average level
Both confidence and conditions in the monthly survey finished the quarter significantly higher (+10 and +11 point respectively)
- Firms expectations for future activity improved as well
- Australia continues to face a 'patchwork' economy
- Q2 Survey finally gave some indication that positive momentum is broadening across sectors
- Confidence is now positive for all industries outside of the mining sector. This is not the case for conditions, although fewer industries had negative conditions in Q2 than last quarter. Service sectors continue to outperform by a large margin in terms of conditions, but confidence is more varied.
- Responses from mining firms continue to be affected by lower commodity prices and falling investment, while industries sensitive to interest rates and AUD look to be doing better.
Leading indicators from the survey remain patchy
- Forward orders were down slightly and are at subdued levels
- Firms' expectations for conditions in 3 and 12 months time both improved, as did conditions in the 'bellwether' wholesale industry - although the level remains very weak
- Perhaps most concerning is that capacity utilisation was unchanged and capex plans for the next 12 months eased back (albeit still elevated)
- The ABS Capital Expenditure Survey, however, suggests a much weaker outcome for non-mining investment