A broad-based rise in companies' reported activity has brought a "thank goodness" from ANZ economists on a day that September quarter GDP figures were revealed to have shrunk by 1.0%.
However, the much more recent ANZ Business Outlook survey for December shows that the measure for "past own activity" (the best GDP indicator) jumped 10 points to 0.
ANZ chief economist Sharon Zollner said the survey showed more signs of demand recovering, "with the first decent lift we’ve seen in past activity, which is the best GDP indicator in the survey".
"At precisely zero it’s certainly not strong in level terms, but it’s clear that the economy has turned a corner. Thank goodness, one would have to say, after this morning’s very weak Q3 GDP outturn," Zollner said.
"The bar for things to improve from here is clearly pretty low."
Business confidence eased 3 points to +62 in December, while expected own activity rose 2 points to +50.
However...
"Surprisingly, the net proportion of firms expecting higher costs over the next three months jumped 7 points to 70%," Zollners said.
"We’ll put it down to volatility for now, but will watch it closely."
Zollner said although the economy has been soft for some time, supply constraints haven’t completely disappeared.
The survey showed the proportion of firms who report finding skilled labour is a problem increased in Q4 for every sector except retail, and as well as the lift in expectation of costs, there was a lift in expectation of higher wages.
“Hopefully it’s just monthly noise, but it’s worth keeping an eye on, given the domestic inflation pulse is still too high (though sticky prices like rates, rents, and insurance explain a lot of it).”
Every third month the survey ask firms to rank their largest problems. Difficulty finding skilled labour increased this month, but other inflationary problems (high rates of pay, other costs, and regulation & paperwork) were steady to smaller.
"The retail sector is an outlier – inflationary problems here remain firmly in retreat, with disinflationary problems dominant. Low turnover is by far the biggest problem for this sector. It’s also weighing heavily on construction and manufacturing firms," Zollner said.
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