Alan Oster Continue Quotations

Businesses continue to look at the future with some skepticism. Companies again report weaker employment outcomes in December, while capital spending also weakened somewhat. The official cash rate is even more firmly on hold for the foreseeable future.

Business concerns about the potential for a sharp fall in future activity have continued to ease.

Oil-sensitive sectors continue to weaken, led down by retailing, wholesaling and transport,

While the Australian economy continues to report sub-trend growth, the December results reinforce the point that it is still performing reasonably well. Conditions improved in December, driven by stronger-than-expected trading and profitability.

The Reserve Bank will continue to monitor higher short-term inflation risks from oil against slowing economic activity. While the bank might engage in occasional bouts of jawboning, we see little prospect of rates moving in either direction for some considerable period.

On transport, it is one of the few sectors that has continued to deteriorate through the quarter, no doubt reflecting the impact of higher oil prices on costs and profitability.