In its Australian Economic Update for September, Morningstar said mining project investment continues to wind down, government spending is restrained and the dollar remains at a level that is still difficult for exporters.
The report also said households remain concerned over measures introduced in the federal Budget, the outlook for unemployment and the five-year outlook for the economy.
“The longer-term outlook component of consumer confidence fell to its lowest level in 16 years in the Westpac and Melbourne Institute Survey of Consumer Sentiment for July,” said Morningstar.
This low level of consumer confidence, according to the report, is reflected in the performance of the sectors most exposed to it, with companies in the consumer staples sector down 1.4 per cent and companies in the consumer discretionary sector down 3.0 per cent.
Morningstar said business confidence has also dropped back from the improvements seen in July, based on the results of the NAB monthly business survey.
While GDP growth in the 12 months to June was 3.1 per cent, just under Australia’s long-term growth rate, Morningstar said that construction is the only sector in very strong shape.
“Looking at the suite of Australian Industry Group performance indices, only construction is in expansion mode at the moment; the services sector in effect is treading water and manufacturing is contracting,” the report said.
“There does not seem to be any imminent prospect of a meaningful acceleration in the economy.”
