Can Australian business confidence hold up?

Business confidence is proving more resilient to the confidence hit from the Commonwealth budget than consumer confidence.

Roy Morgan data shows the measure of business confidence falling by a modest 5 per cent in May.

However, this index has now retraced almost all of the improvement following last September’s Federal election.

May data for ANZ job ads and the NAB business survey in the week of June 9 will provide further indications of the impact of the budget on business.

Given the loss of momentum in partial indicators, we suspect that this week’s 1.1 per cent quarter on quarter gain in quarter one GDP overstates the underlying strength in the economy, with growth looking to be more modest in quarter two.