The latest ANZ business confidence survey has net sentiment down a further 5% to -50%.
The data on firms own indications is a better indicator of the impact on economic growth. They show:
- Net +4% expect to do better in the next year (long term average is +27%)
- Net -5% expect to reduce investment
- Net -6% expect to reduce employment
- Net -17% expect profits to fall
But firms have real concerns about industrial relations policy, minimum wage hikes and costs more generally – and particularly about their ability to pass on higher costs and maintain profitability.
Troubles in the construction sector appear to be starting to cause stresses in related firms. And exporting firms will be keeping a nervous eye on signs that global growth has peaked.
It is mixed, to be sure, and we certainly do not expect growth to rocket away any time soon. But nor are we forecasting a painful slowdown.
The fundamentals remain in place for ongoing growth, albeit at a more modest pace – provided we don’t talk ourselves out of it.
The next few months will be key.