The June quarter 2010 ACCI-Westpac Survey of Industrial Trends showed a marked softening of manufacturers’ General Business Sentiment for the second half of 2010.
Business sentiment is down, amidst softening domestic demand projections, RBA rate hikes in April and May, and growing concerns over the global outlook following the European debt crisis. The ACCI-Westpac Institute survey also found profit expectations for the next 12 months have firmed further to well above their decade average level.
When it comes to employment indicators, the ACCI-Westpac Institute survey’s Net Employment and Overtime Worked indicators have both remained stable at well above their decade averages over the quarter, however manufacturers are predicting a fall in overtime worked over the September quarter.
Mr. Greg Evans, Director of Economics and Industry Policy, Australian Chamber of Commerce and Industry, believes the result to be indicative of continued recovery in the second half of 2010, but at a slower pace than earlier expected.
“The overall outlook presented by the June quarter 2010 survey points towards a steady economic recovery, albeit at a slower pace than might have been suggested by the previous quarter’s excessively optimistic predictions. While general business confidence is deteriorating, actual net outcomes for demand and production have firmed and forward projections by the manufacturers surveyed in respect of their own firms remain robust.” Said Greg Evans.
Mr. Bill Evans, Chief Economist, Economics & Research, Westpac Banking Corporation was surprised by the result, especially as it came after the release of the Federal Budget and the response to the Henry Tax Review.
“It shows that business conditions, as measured by the Westpac–ACCI Actual Composite Index, have remained strong and generally around the levels recorded in the March quarter. However, the excessive optimism which we saw in the March Survey has dissipated. In the March Survey manufacturers were
expecting conditions to improve at a record pace over the June quarter. In the event, conditions improved at about the same pace as in the March quarter.” Said Bill Evans.