Only way is up; confidence business conditions will improve leaps to 10-year high

Thursday, 29 August 2024

The proportion of businesses that believe the economy will be in better shape in a year’s time has leapt to a 10-year high, according to an ANZ survey.

The bank reported that a net 51% of firms were expecting “general business conditions” to be better in a year’s time, up from a net 27% in its previous survey in July.

Chief economist Sharon Zollner noted the improvement appeared to precede the cut in the official cash rate announced by the Reserve Bank on August 13.

“The large increases in confidence and activity expectations were evident already in the responses gathered at the very beginning of August,” the bank reported.

“The roughly one third of responses that came in after the Reserve Bank cut the OCR didn’t change the results a great deal.”

Despite the expected rosier outlook, a net 23% of businesses reported their own activity was down on a year ago, only a tiny improvement on the net negative 24% reporting that to be the case last month.

ANZ described that figure as very weak, and suggested the consensus times were about to improve reflected the depth of the current troubles.

“Things are definitely looking up, albeit from a pretty dark place for many firms,” Zollner said.

“Not to be a killjoy, but it remains the case that the hurdle for expecting better times ahead is very low.”

ANZ would be closely watching indicators such as housing auction clearance rates, job advert volumes and the value of bank card transactions to see if the “relative” burst of euphoria was justified and would “actually impact business decisions”, she said.