Commenting on the “mixed bag” of Australian data released in the past week, AMP Capital chief economist Shane Oliver said business confidence remains resilient, despite falling slightly from the previous month in the face of political uncertainty.
This was in part due to an increase in consumer confidence, which Mr Oliver said was helped by the RBA’s decision to cut rates, and a solid climb in housing finance.
“It looks like investor lending is having a bit of a bounce after growth in the total bank book of lending to investors fell way below the APRA 10 per cent limit,” Mr Oliver said, though warning that APRA could stifle lending “as there is a good chance” the regulator could lower the limit to between 7 and 8 per cent.
He also noted that of the companies to submit June half earnings reports, only 37 per cent have exceeded expectations, a drop on the 45 per cent average, though much of the other report data was far more positive.
“[71 per cent of the companies that have reported] have seen their earnings rise on a year ago, 52 per cent have seen their share price outperform the market the day results were released and 93 per cent have either maintained or increased their dividends,” he said, though acknowledging only 20 per cent of companies have, to date, made submissions.
Mr Oliver warned that inflation may yet face more downward pressure and AMP Capital expects June quarter wage growth data, to be released 17 August, will show growth at “a new record low of 2 per cent year on year”.