Business confidence troubled by lockdowns

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Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)

 

Business confidence and conditions both took a hit in June in response to a series of virus-related lockdowns, pulling back from recent record highs.

The National Australia Bank monthly business survey captured the early stages of the Greater Sydney lockdown, as well as the snap restrictions in Brisbane, Darwin and Perth.

Business conditions fell by 12 points to an index of 24 points in June after reaching a record high in May.

Business confidence also declined nine points in June, to 11 index points.

“Though confidence has declined by 13 points over the past two months, it remains around twice its long-run average,” NAB chief economist Alan Oster said.

“Overall, there has definitely been a pullback across the range of variables in the survey this month including a small softening in forward indicators.”

Even so, survey outcomes over the June quarter point to another solid economic growth result, and any lingering impacts of the lockdowns are more likely to impact the September quarter, Mr Oster said.

Separately, it appears a potential lengthy lockdown and record levels of virus cases are not enough to dent the mood of Sydneysiders for too long.

The weekly, and more up to date, ANZ-Roy Morgan consumer confidence index rose two per cent nationally, partially recovering the 3.9 per cent drop of the previous week.

Confidence in Sydney jumped 3.7 per cent.

ANZ head of Australian economics David Plank said the overall positive result also came after Brisbane, Perth and Darwin emerged from their lockdowns.

He also noted when comparing Sydney and Melbourne that even though there is a sharp decline in confidence in one particular city whenever a lockdown is imposed, sentiment tends to be similar in both cities.

“There was no great divergence even during Melbourne’s prolonged lockdown in 2020,” Mr Plank said.

The positive result is good news for retailers and comes ahead of an expected additional support package from the federal and NSW state governments to assist business and workers.

A separate report suggests executives at Australia’s top companies may not be so happy with their lot with pay outcomes for CEOs falling to their lowest levels in more than a decade.

Research by the Australian Council of Superannuation Investors found almost one third of chief executives among companies on the ASX 100 received no bonus in the past financial year, reflecting the impact of the COVID-19 pandemic.

“Newly appointed CEOs almost always now start on a salary base significantly lower than their predecessors and bonuses are becoming not just harder to achieve, but more often paid in equity rather than cash,” the council’s Louise Davidson said.

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