Firms glum on lockdowns, consumers less so

Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)


Business confidence has dropped on the series of virus lockdowns in recent weeks, but consumers are surprisingly upbeat, particularly in Sydney.

The National Australia Bank’s influential monthly business survey for June captured the early stages of the Greater Sydney lockdown, as well as the snap restrictions in Brisbane, Darwin and Perth.

“Overall, there has definitely been a pullback across the range of variables in the survey this month including a small softening in forward indicators,” NAB chief economist Alan Oster said.

Business conditions fell 12 points to an index of 24 points in June after reaching a record high in May.

Business confidence also declined nine points in June, to 11 index points.

“Though confidence has declined by 13 points over the past two months, it remains around twice its long-run average,” Mr Oster said.

He says survey outcomes over the June quarter point to another solid economic growth result, and any lingering impacts of the lockdowns are more likely to impact the September quarter.

Commonwealth Securities senior economist Ryan Felsman says firms have other worries beyond the immediate impact of restrictions.

“Perhaps an even bigger headache for Aussie firms relates to inflationary pressures due to labour shortages and supply chain bottlenecks,” Mr Felsman said.

The NAB report showed labour costs rose at a quarterly rate of 1.9 per cent in June, the strongest growth rate since July 2010, while purchase costs were up 2.1 per cent, a pace not seen since October 2008, he said.

Separately, it appears a potential lengthy lockdown and record levels of virus cases are not enough to dent the mood of Sydneysiders for too long.

The weekly, and more up to date, ANZ-Roy Morgan consumer confidence index rose two per cent nationally, partially recovering the 3.9 per cent drop of the previous week.

Confidence in Sydney jumped 3.7 per cent, having slumped 8.9 per cent in the previous week.

ANZ head of Australian economics David Plank said the overall positive result came after Brisbane, Perth and Darwin emerged from their lockdowns.

He also noted when comparing Sydney and Melbourne that even though there is a sharp decline in confidence in one particular city whenever a lockdown is imposed, sentiment tends to be similar in both cities.

“There was no great divergence even during Melbourne’s prolonged lockdown in 2020,” Mr Plank said.

But another report suggests executives at Australia’s top companies may not be so happy with their lot, with pay outcomes for CEOs falling to their lowest levels in more than a decade.

Research by the Australian Council of Superannuation Investors found almost one third of chief executives among companies on the ASX 100 received no bonus in the past financial year, reflecting the impact of the COVID-19 pandemic.

“Newly appointed CEOs almost always now start on a salary base significantly lower than their predecessors and bonuses are becoming not just harder to achieve, but more often paid in equity rather than cash,” the council’s Louise Davidson said.


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