Sharon Zollner: ANZ Chief Economist on the rising optimism businesses have for the future

ANZ's latest report shows businesses are feeling more optimistic for the future than they have in years.  

The monthly update shows business confidence is at its highest in a decade, rising 23 points to 51. 

Expected activity jumped to a seven-year high, increasing 21 points to 37. 

However, actual business activity rose only one point to negative 21. 

Chief Economist Sharon Zollner says many businesses are seeing the light at the end of the tunnel. 

She says we'll have to wait and see if this hope actually impacts business decisions. 

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Episode Transcript

Speaker 1 (00:00):
Well, can you feel a vibate? The business confidence numbers
from the Ainsage Regular survey have exploded to their highest
levels in a decade. General sentiment rows twenty three points,
best results since May of fourteen. The chief economists today
and Zed Sharon's olders were the Sharon Morning, Good morning,
so important to point fifty one plus fifty one, so
we're above fifty it's a low base.

Speaker 2 (00:21):
Well, yeah, essentially these questions are asked relative to today,
and we have a question in there about how the
last last month has gone. That's there's a net twenty
one percent firm saying that activity was lower than a
year earlier. So the bar for improvements from that point
is fairly lot.

Speaker 1 (00:37):
Were you surprised by the size of the jump though,
It just strikes me we're desperate for something. We've seen
Adrian do a bit of there's maybe some life in
the economy, whatever, and then you know, we're happy.

Speaker 2 (00:50):
You know, I think I think it is a really
positive sign. It's the first reaction obviously to a lower rate,
so the Reserve Bank only cut rates in the middle
of the month. These higher results were evident already at
the very start of the months, but already by then
we were seeing falls and wholesale rates. We were seeing
con spring forward their forecasts for when cuts would come.
So the whole visor of the discussion had changed to

(01:13):
the idea that rates cuts were coming very soon. So
I think certainly that had a huge amount to do
with these results.

Speaker 1 (01:17):
Actually, before I forget what's your vibe, I noted the
other day the Bank of England's cut once and they
they're claiming they've seen a material difference and change in
the housing market after one cut. Would you expect something
similar here or not?

Speaker 2 (01:30):
Well, if you just look at the level of rates,
you say, no, that's ridiculous. But there is a threshold
and crossed. A switch has been selected of people who
are thinking of buying a house now are thinking, okay, well,
if I can handle the rates today, then I'm good.
Whereas you know, even just two months ago they were thinking, well,
we don't know if rates could go higher. I don't know,
this is all. I'm very uncertain. I'm not sure I
can take that risk. There is certainly a perception that

(01:51):
the risk of higher rates is out the window and
that better times are just a question of time. So
I don't think it's unquestionable at all. I don't think
it's unlike unlikely that the first cut is the deepest.
To quote Rod Stewart that that the turn in the
cycle is in and of itself quite important. So we'll
be watching things like the auction clearance rate for Bartht

(02:11):
and Thompson. That that's where you get the most the
most leading information, and that has actually ticked up a
little bit the last couple of weeks. It's not high.
I do you definitely find.

Speaker 1 (02:20):
I do love an economist who quotes Rod Stewart. The
pricing intentions rose. Is that a concern or not inflation
really speaking?

Speaker 2 (02:28):
Yeah, well, it was disappointing. We saw both the proportion
of firms saying they're going to raise their prices imminently
and the amount by which they intend to raise them.
Both of those ticked up for the second month in
a row. If you sit back and look at the chart,
it's pretty clear there's a strong downward trend. But those
things do need to fall further to be consistent with
the Reserve banks inflation expectations, So it'd be nice to

(02:49):
see a drop next month. But you know, the cost
measures were also very, very sticky, So you know, I'd
say that the Reserve Banks has stopped the antibiotics a
day early, perhaps compared to what there is Earlier forecast
had suggested they've got fewer runs on the board and
except my metaphors completely. Then they said they were going
to need That's not an unreasonable thing to do because

(03:10):
the growth is looking weaker than they thought. But you know,
they've taken a bit of a pump. There weren't any
risk free choices they could have made this month. But
it does mean that we're all going to be watching
the data with even greater interest than normal.

Speaker 1 (03:23):
Ain't that the truth? You have a good weekend as well.
Sharing's on AMZ Chief Economists. For more from the Mic
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