We expect growth in the global economy to remain subdued out to 2026.
Insight
April 28, 2014
ASX 300 Quarterly Business Survey – March 2014
Business conditions for ASX 300 maintained momentum in the first quarter of 2014 - the broader economy weakened as it dipped back into negative territory. Confidence for larger firms surged to its highest level in the 3-year history of the survey.
Business conditions for ASX 300 maintained momentum in the first quarter of 2014 – the broader economy weakened as it dipped back into negative territory. Confidence for larger firms surged to its highest level in the 3-year history of the survey, rising by a greater extent than the broader economy. Capex remained subdued, cash flow strengthened slightly and credit was more readily available.
Business conditions for ASX 300 increased for the second consecutive quarter, recording a strong reading of +12 in the March quarter. Trading conditions and employment continued to improve, however profitability eased from its recent high. Conditions (not seasonally adjusted) for the broader economy dipped into negative territory to -1 points (from +1 in Q4 2013).
The only two industries that recorded negative conditions for ASX 300 – construction and mining – both appear to have had a bad run into the start of this year. Construction plunged -45 points to a final reading of -56 index points, despite the recent lift in residential building approvals. Meanwhile, conditions in mining eroded further to -16 (from -7 previously).
On a brighter note, business confidence for ASX 300 surged to a series high, accelerating to +11 points from a reading of +1 previously – this is the highest level in the 3-year history of the survey, admittedly all of which is post-GFC. In the broader economy confidence (not seasonally adjusted) increased but to a lesser extent, rising to +9 points from +7 in the previous quarter.
Retail inflation pressures edged down, although producer price inflation generally rose (driven by services and mining). Labour costs for larger firms picked up but sales margins were unchanged.
Forward indicators are mixed. Capex for larger firms remained subdued, and below the broader economy, but near term expectations look to be more promising, as do expected business conditions. Capacity utilisation for larger firms hit their lowest rate in the brief history of the survey and forward orders eased.
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