RBA governor Glenn Stevens recently said that Australian business needed more “animal spirits” in order to to fast-track the economic transition within the economy.
It’s a theme picked up on by the Commonwealth Bank’s director of equity strategy Tim Rocks, according to the Fairfax press this morning.
Rocks said that he and his team are seeing a larger Australian focus on “cost-cutting and not about how you capture the growth outlook”.
That’s bad news for the economy and while somewhat chicken-and-egg, shows how difficult top line sales must be at the moment.
“So, we actually tallied up and found that about half the listed companies that we cover are in the middle of aggressive cost-cutting campaigns,” Rock said.
“This isn’t about getting rid of chocolate biscuits from the kitchen; this is really fundamentally changing their business to try and lower the cost structure.”
It’s a sign of a weak economy. An economy in which, if you take out Sydney’s house price surge, the RBA would be seriously considering an interest rate cut on Melbourne Cup Day.
According to Rock:
Corporate Australia is not going to lead this recovery; they may respond to it when they see it, but their mindset is not one where they are actually even just looking for those opportunities.
Slow growth is the new black for the Australian economy it seems.
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