Confidence may be improving among the shopping public but at the big end of town, Australia’s largest companies aren’t as sure as they were about the economy.
The NAB’s Quarterly ASX 300 Business Survey (QBS) shows a significant drop in confidence from a position of above average confidence relative to the broader economy to marginally below.
Businesses are reacting to the subdued domestic demand outlook and the increased uncertainty following the May federal budget.
The decline in business confidence is driven by the deterioration in manufacturing, retail and mining.
The NAB says the high Australian dollar may have adversely affected confidence in manufacturing while soft commodity prices likely weighed on mining confidence.
The most positive and improving confidence reading was in recreational and personal services while construction confidence (now around zero) continues to improve from previously poor readings.
Relative to the broader economy, confidence in ASX 300 firms is much stronger in the recreational and personal services sector and also more positive in finance, wholesale and retailing.
But confidence is relatively weaker in ASX 300 construction firms than construction firms more generally.
Business confidence for ASX 300 reverted back to levels of late 2013, recording +3 points, a significant reduction from the +11 March quarter reading.
The NAB says the ASX 300 companies, in the main, would also have not benefited from the reduction of the corporate tax rate to 28% from 30% contained in the Budget.