“The outbreak of the conflict in the Middle East saw business confidence fall 29 points to minus 29 index points, the second largest monthly fall in the survey’s history, with falls of this magnitude previously only seen in the GFC and the onset of COVID,” said Spence. “Business conditions fell only one point to six index points in March, reflecting that while the global news backdrop has impacted sentiment, it is still early days in terms of the flow through to activity.
“Resilience in business conditions also highlights that the economy had carried a healthy level of momentum heading into the unfolding shock.””
Forward orders fell sharply in March, erasing gains seen earlier in the year and pointing to rising caution among firms. Capacity utilisation, however, rose to 83.1 per cent and remains well above its long-run average.
“The impact on measures of costs and prices has been immediately obvious, with purchase cost growth in quarterly terms more than doubling to three per cent and product price growth rising to 1.1 per cent,” said Spence.
Business confidence is now negative across all states, while business conditions remain positive in most regions. Western Australia and South Australia recorded improvements in conditions over the month, while Victoria saw the largest decline.