Business confidence in Australia’s largest companies fell in the first quarter of 2015, according to a survey by National Australia Bank. The survey revealed that confidence across the largest 300 companies was well below the general economy. Sentiment was especially weak in large construction firms. Although business conditions were still positive, they fell into a lower range. Trading, profitability and employment were all lower. The fall in business confidence was led by weak mining related construction, which sent the business confidence index to negative five points. In the broader economy, business conditions in the ASX 300 remained stronger, but fell from 10 to six points.
NAB Group Chief Economist Alan Oster commented on the results, saying “surprisingly, conditions are down heavily in recreational and personal services, offsetting gains in transport, utilities, finance, property and business.” Employment conditions also fell significantly, down to negative seven points. This fall was much more pronounced than in the general economy and was led by deteriorating conditions in mining, wholesale and construction. Trading conditions fell 6 points to 11 points in total.
Mr. Oster also cited a 5 point drop in profitability among ASX 300 firms to 12 points in total, led by major falls in recreation and personal services. Capital expenditure plans over the next twelve months were also “disappointing”, falling 15 points to 0. The drop was led by mining and wholesale. However, capacity utilisation rose 1.3 per cent to 85.9 per cent compared to the end of 2014. Despite the downward pressure of the Australian dollar during the quarter, export orders fell generally across the ASX 300. However, transport and utilities did report an increase in forward orders.
Author: Imran Valibhoy
May 07, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.