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- Business confidence holds steady in March - ANZ survey
- Firms expect a better outlook for themselves
- Profits expected to improve; a few disconcerting hints of higher inflation
- ANZ says business environment improving, but not easy
The improvement in the economy is looking set to be a bit of a slog, according to ANZ Bank's March survey.
The survey's headline measure showed sentiment steady with a net 58 percent of firms expecting an improvement in the year ahead, while the more closely followed measure of businesses' own outlooks improved four points to 49 percent.
Chief economist Sharon Zollner said firms showed that conditions were getting better, but it was not easy.
"Firms remain confident that better times lie ahead and are positioning themselves to take advantage of that as best they can, but many remain hampered by poor cash-flow."
She said a broad based improvement in activity and employment had been noted, while profits were expected to head higher, and export and investment intentions were steady and positive.
'Disconcerting' inflation signals
But firms expected higher costs and to have to raise their prices, while inflation expectations edged higher to 2.6 percent.
"The lift in inflation indicators is becoming a little disconcerting," Zollner said.
She said the bank had downplayed the warnings from such figures in 2021, although conditions then much different with people and goods turning scarce all over the economy.
"Today's flurry of inflation pressure is much more likely to reflect raw material prices, energy prices, and the weaker currency."
"That's not comfortable for firms, but it's much less likely to become persistent," Zollner said.
She said inflation indicators would influence the Reserve Bank's enthusiasm for continued cuts in the Official Cash Rate.
"A cut next month looks assured and a follow-up in May looks highly likely, but a third in July is more of a coin toss at this stage."
The ANZ's questions on what worried firms showed problems of competition and low turnover remained dominant while interest rates were fading as a problem, while the outlook for tariffs was a minority issue, as was the weakness in the currency.
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