Australian business data expected to show limited optimism
The National Australia Bank’s monthly business confidence survey for the COVID-hit Australian economy is due today for May.
The survey of 350 companies is an early indicator of future economic activity in investment, hiring and spending. April’s survey (released on May 12) gave a -46 rating, which indicated an expectation of worsening economic conditions. However, it was an improvement on the results for March, which recorded a -66 rating on the index—the worst in the survey’s history.
Coming off the news last week of -0.3% growth in March—which makes a recession all but certain—Prime Minister Scott Morrison’s government will be hoping that the upward trend continues from April’s business confidence rating.
A negative but improving rating is highly likely as all states open their economies up further and daily COVID-19 cases significantly slow down countrywide. However, confirmation of the first Australian recession in 29 years hints at tougher economic conditions, even if business confidence is recovering. This will hinder a rapid “V-shape” sharp economic rebound in growth for the time being as firms hold back on investment and hiring. Moreover, longer-term sluggish growth will likely force more small and medium-sized businesses to downsize further to survive.
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