Australia’s economy is showing signs of life

The men who hold the purse strings at Australia’s biggest businesses say the economy is improving and are the most optimistic about the future since Covid.

Australian chief financial officers believe there will be good times ahead for their businesses, with confidence growing to levels not seen since the pandemic.

Deloitte’s biannual CFO sentiment survey, which interviews 66 ASX-listed CFOs, shows optimism about the economy surged 12 percentage points in six months to record a positive reading for the first time since 2022.

Overall, threats to the Australian economy have slipped to fifth place among fears for business leaders.

CFOs of Australia’s largest businesses are becoming increasingly optimistic about the future. Picture: NewsWire / Nicholas Eagar

Instead, these CFOs fear being unable to execute on strategy, losing key talent and changing government regulations.

Deloitte Access Economics partner David Rumbens said the latest survey results show businesses are expecting the economy to continue to improve in the new year.

“CFOs clearly expect better times ahead, which is good news – but many of the risks that CFOs are currently grappling with will not disappear overnight and will weigh heavily on decision-making,” he said.

Mr Rumbens said many CFOs saw Australia switching to a recovery phase, with focus shifting inward and the inability to execute strategies and securing and retaining key talent top of mind.

“Businesses are expecting that in the next 12 months the economy is starting to move slightly beyond a neutral point in terms of their performance,” he said.

“There has been a mind shift from overwhelmingly worrying about the economy to one that while it is not great, they are neutral.

“We know that consumers have been building up savings buffers and that’s starting to translate into some extra spending.

“Businesses could be sensing that there’s some additional spending capacity happening across the economy.”

Treasurer Jim Chalmers says Australia is making progress. Picture: NewsWire / Nikki Short

While Mr Rumbens said CFOs were becoming increasingly confident about the economy, they were still wary of some of the road bumps along the way.

He highlighted last week’s national accounts data, which showed economic growth slowed to just 0.8 per cent for the 12 months to September.

The largest detractor from growth was electricity and gas spending due to the implementation of the energy bill relief rebates. These rebates are treated as a shift from household to government expenditure in the national accounts.

But households are largely spending less and business investment remains subdued, with gross domestic product growing by negative 0.3 per cent on a per capita basis.

Treasurer Jim Chalmers acknowledged economic growth came in under market expectations but contended government spending had padded the economy from a hard-landing recession.

“The most encouraging aspect and the most important aspect of today’s national accounts is what it says about real incomes growth,” Mr Chalmers said.

“This growth in real incomes reflects the progress we are making when it comes to moderating inflation but also solid wages growth and very importantly the government’s cost-of-living tax cuts.”

Deloitte partner and CFO program leader Stephen Gustafson said the survey results were encouraging, but CFOs weren’t out of the woods just yet.

“Risk appetite is increasing but remains historically low, and though net sentiment about the economy has improved, 68 per cent of CFOs feel neutral towards it,” Mr Gustafson said.

“This suggests that while CFOs are cautiously optimistic, good times are far from guaranteed. CFOs have recent, first-hand experience of how quickly economic conditions can change, and a range of uncertainties still weigh heavily on the year ahead.”

Originally published as Australia’s economy is showing signs of life