Australian businesses record minor improvements in sentiment, current conditions in September

Businesses in Australia have recorded small improvements in confidence as well as in current conditions in September. Smoothed business conditions indicate that the deceleration in New South Wales continues, whereas activity in Victoria continues to be strong.

Business conditions rose a bit in the month; however, the details came in slightly mixed. Profitability and trading conditions both recorded strong improvements. Profitability indicated a positive signal of companies’ demand for labor, noted ANZ.

However, these rises were majorly countered by subdued employment and capacity utilization. Capacity utilization has dropped to the lowest level since December 2015. After many years of increasing utilization, surveyed slack rose in 2016. This is a disappointing result in terms of a lesser requirement for companies to raise their investment, according to ANZ.

In New South Wales, conditions have softened in recent months, in line with other indicators that imply the state of New South Wales has lost momentum. However, this is not a cause for concern at the moment as activity levels and conditions continue to be positive, said ANZ. Nonetheless, it is noteworthy that the growth rates of the state returned to ‘normal’. Meanwhile, conditions in Victoria continued to stay solid, implying that the state continues to have considerable momentum.

On the other hand, mining sector’s business conditions rebounded for the second consecutive month; however, they remain quite subdued in trend terms. The sector continues to be hurt by the decline in employment and investment. But this drag is expected to wane in the months ahead through 2017, added ANZ.