ASX 300 Quarterly Business Survey – March 2013

ASX 300 show greater resilience than the broader economy in Q1, with conditions stable. Finance, Business & Property considerably stronger. Confidence rebounded but weaker forward orders & stocks point to potential softness in the next quarter.

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ASX 300 show greater resilience than the broader economy in Q1, with conditions stable. Finance, Business & Property considerably stronger. Confidence rebounded but weaker forward orders & stocks point to potential softness in the next quarter.

  • Business conditions for the ASX 300 were stable in March, remaining neutral at 0 points – in contrast to declines recorded in NAB’s Quarterly Business Survey (QBS), which was down to -7 points. Aggregate results mask significant movements by industry, with the Finance, Business & Property Services sector considerably stronger, while Retail and Manufacturing weakened. ASX 300 firms expect conditions to improve, up to +8 points, in Q2.
  • Business confidence improved across the economy, with confidence levels for the ASX 300 and QBS moving in lockstep, from -8 points to +4 points. Manufacturing, the Finance, Business & Property Services sector and Mining were the main contributors to the rebound for the ASX 300.
  • Softness in the domestic economy was evident in deteriorating measures of sales margins, forward orders and stocks for the ASX 300 – with trends for the ASX 300 in line with the economy average.
  • Cost pressures have remained comparatively soft across the economy in recent quarters. In particular, ASX 300 firms reported falling prices for purchases and overheads in Q1, but also falling product prices – with each of these measures down around -0.1%.
  • ASX 300 capacity utilisation recovered in Q1 (after a dip in the December quarter). However there was a sharp fall in capital expenditure, with the ASX 300 in line with the broader economy at -3 points (down from +12 points in Q4 2012). Most sectors recorded declines, with Retail, the Transport, Utilities & Communications sector and Wholesale contributing the most to the declines.
  • The cashflow position of the ASX 300 improved in the quarter, up from +10 points to +18 points. This strengthening was counter to a weaker trend for the broader economy.
  • Firms in the ASX 300 viewed demand as less of a constraint on their profitability and output – compared with a peak in the December quarter. There was minimal change in the QBS measures.

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