September 30, 2011
NAB Quarterly ASX 300 Business Survey – September 2011
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. Business conditions for ASX300 declined further in Q3 – driven by manufacturing – narrowing the gap […]
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.
Business conditions for ASX300 declined further in Q3 – driven by manufacturing – narrowing the gap to the broader economy; large firm confidence has turned negative and is weaker than average.
- Business conditions for ASX300 firms recorded a net balance of +3 points in September – down from +6 points in our June survey. There is a notable difference between the ASX300 and the broader economy within employment conditions – which ASX300 firms expect to remain negative across the next 12 months.
- The key driver of this weakness has been manufacturing – with conditions in this space (particularly for employment) quite negative. Excluding mfg, business conditions were essentially unchanged at +10 points.
- Business confidence has trended downwards, turning negative in Q3 for both ASX300 firms and the broader economy – with confidence weaker among larger firms. By state, Queensland and Western Australia are the strongest, while Tasmania and New South Wales record the weakest confidence for ASX300 firms.
- Interest rate expectations shifted noticeably between Q2 and Q3 – from almost +0.5 per cent to almost -0.25 per cent. Despite this shift, ASX300 firms expect a considerable deterioration in the borrowing environment, with an increase in the share of firms reporting no borrowing requirements, at 41% – broadly in line with the QBS.
- Demand remains the key constraint on both output and profits for firms in both the ASX300 and the broader economy. For output, availability of suitable labour is also a critical factor.
- Labour cost increases are significant for both the broader economy (+1.1%) and the ASX300 (+0.9%). Large firms reported a limited capacity to pass through to end consumers, with product prices rising by just 0.1%. Over the next quarter, ASX300 firms expect more modest increases in costs, but no increase in end prices.
- The capital expenditure of ASX300 firms continues to significantly outpace the economy average. A net balance of 21 per cent of large firms reported an increase in expenditure – a little softer than in Q2, but well above the 10 per cent recorded in the broader economy. Larger firms are tipped to maintain this trend over then next year.
- By industry, there remains a wide disparity in business conditions – with large Mining strong (+60 points), and large Manufacturing the weakest (-22). ASX300 Manufacturing, Finance, Business & Property Services, Recreational Services and Transport, Utilities & Communication reported weaker conditions than their QBS peers.
- The range in business confidence between industries narrowed in Q3 for ASX300 firms, with the strongest levels recorded in Transport, Utilities & Communications (+12 points) and Mining (+10 points), and the weakest in Recreational Services (-14 points) and Retail (-17 points).
For further analysis download the full report.