ASX 300 Quarterly Business Survey – March 2015

ASX 300 business confidence fell further in Q1 2015 to remain well below the general economy. Sentiment is particularly weak among very large construction firms. Business conditions while still positive also fell, with trading, profitability and employment all lower.

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ASX 300 business confidence fell further in Q1 2015 to remain well below the general economy. Sentiment is particularly weak among very large construction firms. Business conditions while still positive also fell, with trading, profitability and employment all lower.

Business confidence fell substantially to a below economy level of -5 points, led by a very weak outcome in mining related construction.

Business conditions remain stronger in the ASX 300 survey compared to the broader economy, but still retreated to +6 (from +10).

NAB Group Chief Economist Alan Oster said: “surprisingly, conditions are down heavily in recreational and personal services, offsetting gains in transport, utilities, finance, property and business”.

Employment conditions also deteriorated significantly to -7, again a much more significant fall than in the broader economy, led by large shedding in mining, wholesale and construction. Trading conditions also fell (-6 points) to +11, with conditions particularly weak in construction and mining.

“Profitability among ASX 300 firms also fell -5 points to 12, led by big falls in recreation and personal services” said Mr Oster.

“Capital expenditure plans over the next twelve months were also very disappointing, falling from +15 to zero (compared to +21 in the broader economy), led by mining and wholesale” said Mr. Oster.
More encouragingly, and in line with stronger near term activity levels, capacity utilisation improved to 85.9%, a positive lift from 84.6% at the end of 2014.

Despite the downward pressure of the Australian dollar, export orders among ASX 300 firms fell. There was however a notable increase in forward orders, particularly in transport and utilities.
ASX 300 firms also reported weaker margins and cash flow positions, despite lower labour, purchase costs and overheads.

Overall, the outlook for business conditions among Australia’s largest firms over the next three to twelve months has softened.

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