Simon Murray, analyst at Westpac, notes that the Westpac-Australian Chamber Actual Composite index declined to 61.5 in June from 61.8 in March.
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“The Composite remains at a positive level but suggests that the loss in momentum from mid-2018 has persisted into mid-2019.”
“The reading for the Composite index is supported by rising output, albeit at a slower pace; new orders; backlog; and overtime. However, employment levels stagnated over the past three quarters. The Australian economy has slowed to an annual growth pace of 1.8%, the softest result since the time of the GFC – September 2009. Private demand is contracting but this is being offset by solid public spending.”
“The Expected Composite recovered to 63.3 in June from 60.2 in March. Similarly, optimism surrounding the general business situation bounced with a net 28% of respondents expecting an improvement over the next six months compared to a net 12% in March. The brief dip in manufacturing firm sentiment in March may have been associated with uncertainty ahead of the Federal election. Now that the election is over, along with added impetus from the RBA rate cut on 4 June, optimism has recovered back to levels seen in December 2018, although that is still well down from 2017 peaks.”
“The survey’s Labour Market Composite, which broadly tracks economy-wide employment growth, is at 52.4. The index correctly led the uplift in employment in 2017 and identified the turning point to slower momentum in 2018. The current level suggests employment growth should hold a moderate pace.”
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