Business

Poor expectations urge rate cut

The April 2012 ACCI Survey of Investor Confidence shows that most actual and expected business indicators stabilised at low levels over the March quarter, amidst concerns about international uncertainty, the strength of the Australian dollar and the underlying weakness in Australian non-mining industries.

With the exception of Expected Unemployment Rate, all indicators remained below their five year averages over the quarter.

The current indexes of Own Business Conditions, Sales and Profitability remained close to their historic low levels over the March quarter, while the reading of these expectation indexes indicates that businesses remain pessimistic about their own trading conditions and business performance over the June quarter.

While the actual indicators for National Economic Conditions and Climate for Investment remained relatively unchanged, their expectation indicators continued to edge lower over the quarter indicating businesses are expecting a further slowdown in the domestic economy which will further dampen business investment plans.

Business Taxes and Government Charges remained the largest constraint on business investment for the 15th successive quarter. Weak trading conditions and rising labour costs have caused Non-Wage Labour Costs and Wages Costs to increase to the fourth and seventh largest impediments on investment respectively over the March quarter.

Mr Greg Evans, Director of Economics and Industry Policy at ACCI commented:

"This Survey highlights that while actual business conditions have stabilised at low levels over the March quarter, it is concerning that business hiring intentions remained close to its historic low levels. Continued weaknesses in sales and profit performance, coupled with rising costs including the looming carbon tax have further dampened business forward expectations.

"There is no doubt the cumulative impact of poor demand conditions and rising costs is taking a heavy toll on business confidence. The arguments for an official rate could not be clearer and the Reserve Bank should take action tomorrow. Monetary policy is far too restrictive for the mainstream economy languishing at growth rates below 1% which is confirming signs of weaker labour market conditions."

Topics:  cash rates, economy, interest rates, rba, unemployment




Stay Connected

Update your news preferences and get the latest news delivered to your inbox.

Winter freeze: How cold was it this morning?

It was a cold morning on the Northern Rivers.

It was a chilly morning - check to see how cold it was in your town

New port could see trains return from Casino to Murwillumbah

The Clarence River is the setting for the towns of Iluka (left) and Yamba (right

Ambitious plan to transform Port Yamba into a major sea freight hub

Can you see smoke near Broadwater?

If you spot smoke today, know this:

Latest deals and offers

Lismore real estate agent celebrates 100th birthday

LJ Hooker Lismore principal Paul Deegan is the third generation to operate the 100-year-old family business.

A Lismore real estate is celebrating 100 years in business.

Coastal development keeps young people on Northern Rivers

Wes Bale is a 27-year-old born and bred Lennox Head local who is an example of the demographic shift in the region.

Young Northern Rivers residents are looking closer to home