The CBA’s Future Business Index (FBI) was released today and showed that “business sentiment was not immune to the negative post budget reaction seen in the consumer space” according to CBA Chief Economist Michael Blythe.
Blythe noted that that FBI readings in the June quarter are now back around average levels but that WA and Queensland businesses seem to be more impacted, especially in “mining and associated construction sectors”.
But just like the NAB earlier this month the FBI appears to show that the impact of the high Aussie dollar is much less on Australian business than many expect.
Blythe noted that:
Clearly the RBA is unhappy with where the Aussie is sitting! Our perception is that the RBA would be comfortable with the AUD settling in a USD$0.85–$0.90 range. The majority of FBI respondents expect the currency to be in that range or lower by mid-2015.
Somewhat surprisingly, given the focus on the AUD, the FBI survey reveals that 54% of FBI respondents see the AUD as having “no impact” on their competitiveness. In line with that belief, around 85% of respondents suggest that the exchange rate will have no impact on labour hiring or capital spending plans.
Many forecasters including the RBA and David Bassanese from BetaShares’ believe that the Aussie will head susbstantially lower in the months ahead. But the risk this survey seems to highlight is that Business isn’t worried at the moment this lack of concern is associated with the expected fall which may not materialise as expected. But for now the high Aussie dollar isn’t worrying too many Australian businesses.