October 30, 2014
ASX 300 Quarterly Business Survey – September 2014
ASX 300 business confidence gained momentum in the September quarter, surpassing the broader economy. Conditions were broadly unchanged - trading and profitability were stronger, however the slight improvement was offset by deteriorating employment…
ASX 300 business confidence gained momentum in the September quarter, surpassing the broader economy. Conditions were broadly unchanged – trading and profitability were stronger, however the slight improvement was offset by deteriorating employment, which weakened to its worst level since this time last year – reflecting subdued domestic demand.
- NAB’s quarterly index of business confidence surged for both ASX 300 and NAB QBS (latter unchanged when seasonally adjusted) – larger firms recorded a strong reading of +11 for Q3 (from +3 previously) slightly higher than the broader economy at +8 (up from +4). Among the larger firms, fin./ prop./ bus. services, retail and mining were strongest.
- The NAB ASX 300 index of business conditions was unchanged (at +9) – profitability and trading were more robust, but employment conditions diverged (particularly in mining and transport/ utilities/ communication) deteriorating to -7 (-4 previously).
- Larger Australian firms continued to limit product price rises, but the relief for firms from easing inflationary pressures in purchase and overhead costs was offset by higher labour cost. Lower stock levels indicate only tentative re- stocking as larger firms anticipate sluggish domestic demand.
- In the global economy, slower growth (particularly in China) appears to be weighing on ASX 300 export sales (China being one of Australia’s largest trading partners). However, on a brighter note, export orders have improved and could be further supported by recent downward pressure on the AUD. The AUD is currently below ASX 300 dollar expectations.
- Looking ahead, forward indicators reflect Australia’s slower pace of economic growth – domestic orders eased, capacity utilisation edged lower and capital expenditure (capex) remained soft, although capex plans for the near term improved sharply.
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