ASX 300 Quarterly Business Survey – September 2013
Stronger conditions for ASX 300 in Q2 – widening the gap to the economy – but confidence fell sharply. Mining conditions fell, now the weakest among ASX 300 firms. Discounting among ASX 300 may be evident. Stocks & orders point to weakness in domestic economy.
Business conditions for larger firms fell in September – in line with the broader economy – but confidence rebounded (back to positive territory). Forward orders much stronger. Capacity Utilisation edges lower while investment intentions remain mute. Retail prices improving but still weak.
- Larger firms reported a sharp fall in business conditions in the September quarter – down to -7 points (from +2 points in our previous survey) – a level that was in line with the broader economy (which was little changed). Most industries recorded weaker conditions, particularly the Transport, Utilities & Communications sector and Manufacturing.
- The weaker trend in overall business conditions for the ASX 300 was driven by falls in the measures for employment and trading conditions, while the profitability measure remained positive.
- In contrast to conditions, there was a rebound in business confidence across the economy – although the gains were marginally less for larger firms (at +3 points from -3 points in June) than for the broader economy (at +7 points). Among larger firms, confidence trends were stronger for Mining and Manufacturing, while they were weaker for Transport, Utilities & Communications.
- A range of measures indicate a possible end to the discounting cycle among larger firms – with sales margins and final product prices rising in the September quarter, along with the share of firms reporting that demand was a constraint on their output (a measure which fell during the discounting cycle across the first half of 2013).
- Large firms were able to control cost pressures more effectively than the rest of the economy in September – with lower rates of growth for labour and purchase costs, as well as overheads, while final product prices increased at a similar rate.
- Capital expenditure remains weak among larger firms, although it was slightly improved when compared with June. Trends differ between individual industries, with strong trends in Manufacturing and Finance, Business & Property Services and negative trends for Wholesale and Mining.
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- ASX 300 Quarterly Business Survey – September 2013 (PDF 152 KB)