Budget 2021: Businesses primed to invest as confidence reaches new high
Businesses have shrugged off the end of JobKeeper, as corporate conditions and confidence climbed in April to new highs.
Australian firms are approaching the limits of their productive capacity and will need to invest and hire to take advantage of a booming post-COVID economic recovery, according to NAB’s latest monthly business survey.
The report also showed corporate confidence and conditions climbed again in April, with both hitting fresh highs as firms shrugged off the end of JobKeeper in the latest sign the recovery has not been thrown off course by the withdrawal of COVID emergency support.
“It looks like we have moved past the rebound phase and are now seeing healthy growth in most of the economy,” NAB chief economist Alan Oster said, describing the survey result as “stunning”.
Reported capacity utilisation climbed to a record 85 per cent, in data which stretches back to 1989. The measure fell as low as 72 per cent at the peak of the pandemic.
“The strength in capacity utilisation points to an expansion in business investment and ongoing hiring,” Mr Oster said. “This would be a big turnaround from the sluggish growth in business investment over recent years.”
The Morrison government has implemented a range of investment incentives as part of its plan to promote a “business-led recovery”, including allowing the immediate full expensing of eligible capital assets.
“The business sector went from strength to strength in April,” ANZ senior economist Catherine Birch said. “If capacity utilisation is sustained at or rises above its April rate, this will provide a big push for businesses to up their capital expenditure.”
Sub-indexes measuring employment intentions and forward orders both strengthened in the month, pointing to a growing pipeline of work.
CBA senior economist Kristina Clifton said the “very strong employment reading provided more evidence that anyone who may have lost a job at the end of JobKeeper should be able to find a new one”.
NAB’s gauge of business conditions rose 9 points to a fresh record of 26 points, where readings above zero indicate improving conditions. The confidence index lifted 8pts to 32pts, also a high.
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