Quarterly ASX 300 Business Survey – December 2011

The ASX 300 Quarterly Business Survey captures the views of the ASX 300 business community and is a key peer […]

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The ASX 300 Quarterly Business Survey captures the views of the ASX 300 business community and is a key peer comparator for companies. The report shares business and sector insights, and an understanding of economic confidence for the quarter.

Strong rebound in business confidence for ASX300 firms – exceeding the broader economy; business conditions record modest improvement, with conditions in line with the average.

  • Business conditions for ASX300 improved in Q4 2011 – although not as strongly as the broader economy. ASX300 firms recorded a net balance of +5 points in December, up from +3 points in Q3. This result was driven by stronger employment conditions, while both trading conditions and profitability deteriorated. ASX300 firms continue to record stronger expectations for conditions over the next 12 months.
  • Business confidence improved in December, with large firms recording a net balance of +5 points (compared with -3 points in September) – a level exceeding that of the broader economy for the first time.
  • Sales margins marginally improved in Q4 (albeit remaining negative in both surveys), while ASX300 forward orders remained stable. Over the next quarter, larger firms anticipate an improvement in margins and orders – helping to boost profitability and trading conditions that deteriorated in the December quarter.
  • ASX300 firms recorded substantial labour cost increases in Q4 (almost +1.0% versus +0.7% in the QBS), along with a limited capacity to pass through cost pressures, with final product prices rising by less than +0.1%. ASX300 firms continue to anticipate larger increases in labour costs and overheads than the broader economy in Q1 2012, and more modest increases in final product prices.
  • Capital expenditure of larger firms continues to outpace the broader economy – with a net balance of 24 per cent of firms reporting an increase in expenditure. ASX300 firms expect to maintain this trend of stronger investment across the next year.
  • ASX300 firms continued to identify deterioration in borrowing environment in the December quarter, despite recent cuts to official interest rates. Large firms anticipate weaker conditions in the short term, with Wholesale and
  • Transport firms particularly negative. In addition, an increasing number of firms in both surveys are reporting no borrowing requirements (around 44% and 51% of respondents in the ASX300 respectively and QBS in Q4).
  • By industry, the modest improvement in ASX300 business conditions was largely driven by stronger outcomes for Manufacturing, the Transport, Utilities & Communications sector and the Finance, Business & Property Services sector. Overall, Mining remains the strongest (+40 points) while Recreational services & Hospitality (-13 points), Wholesale (-8 points) and Retail (-4 points) are the weakest performers.
  • The strongest levels of business confidence were recorded in Mining (+30 points) and Wholesale (+19 points), while Retail is the softest (-6 points) – albeit retail confidence improved significantly in Q3.

For further analysis download the full report.