Asia Times: Business brimming with confidence



	March 10, 1999	atimes.com

Oceania

Business brimming with confidence

CANBERRA - Australian businesses confidence in the three months to March has risen to its highest level since before the Asian financial crisis.

A survey by Westpac and the Australian Chamber of Commerce and Industry found that business was optimistic despite an expected fall in capital spending.

Almost one third of those surveyed predicted an improvement in the general business situation in the next six months, while only 11 percent expected a deterioration. This resulted in a net balance of 20 percent - the highest level in almost two years.

''This surge in business confidence, coupled with the healthy rise in December, represents the largest two-quarter rise since the stockmarket boom of mid-1997, and the economic recovery in 1983,'' Westpac general manager (economics) Bill Evans told reporters.

''The big pick-up in business confidence has basically returned the level of confidence to the confidence levels prior to the Asian crisis. That gives us a fair bit of confidence to think that the economy can continue on with this momentum in 1999."

He said interest rates would be driven by inflation, and the survey indicated the outlook for inflation was positive. ''Whilst some interest rates are rising, reflecting a rise in U.S. long-term bond rates, I don't think there is anything in the survey to suggest that short-term interest rates will be rising,'' he said.

''Westpac's view is that, given the strength of the economy at the moment, it's highly likely that over the next 12 months or so we'll see flat interest rates."

Demand and production continued to rise in the March quarter, with actual outcomes exceeding predictions made three months ago. Output continued to rise although at a slower rate, and expectations for new orders and output were also up.

But capital expenditure plans for plant and equipment for the next year were down, with spending expected to fall by 8 percent compared with two percent growth predicted in the previous quarter.

The survey said the labor market appeared soft although there had been a slowdown in job-shedding in the March quarter. Twelve percent of businesses expected to employ more staff in the June quarter, compared with 17 percent in the March quarter. And 26 percent expected staff numbers to be down compared with 32 per cent in the March quarter.

(Asia Pulse)