Overall, the survey results for June continue to suggest that the business sector has lost significant momentum over the past year or so. Business confidence largely unwound the bounce in May and while business conditions rose in the month, they remain below average.
The recent run of results also suggest that the economy is unlikely to record a significant pickup in growth in Q2. Further, forward orders also remain below average (and are negative), suggesting a near-term turn around in business activity is unlikely. Capacity utilisation on the other hand saw a sharp rise in the month, though this comes after a notable weakening earlier in the year. Survey measures of inflationary pressure remain very weak, with output price growth remaining low and the retail prices showing an outright decline in the month. The weakening in momentum has been broad-based across the business sector over the past year, with all industries having weakened. Retail also continues to show ongoing malaise, with reported business conditions at a level last seen in the GFC – while manufacturing has also shown steep declines.
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Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
