With so much new economic data out there, we thought it was a good time to update business owners with what’s going on in the market so they can make well informed decisions for their business.

To keep you in the loop, I’ve broken it down in this video [see transcript below].

 

 

transcript

In this edition of ‘in the loop’, with some great new economic data out there, I thought it was a great time to update business owners on the market conditions that they need to be thinking about as they plan for the year ahead.

 

1. CPI

First, of course, we had our CPI data out for June. Now that shows a 3.8% annual increase in inflation. The important thing with that, as the Reserve Bank of Australia [RBA] governor mentioned, is it’s still well outside the 2-3% inflation range or target range that they’re working towards.

 

2. services inflation

The other thing I’m pretty glad to see is we’re starting to get more airtime to the idea of services inflation vs goods inflation. I saw a graph the other day where the services inflation is continuing to rise, whereas the goods inflation has eased or maybe even dropped.

 

3. wages growth peaked

Of course, the biggest driver of services inflation is wages growth. With labour shortages, it was good to hear the RBA’s recent statement say that wages growth has probably peaked.

 

4. higher for longer

You’d be living under a rock if you hadn’t seen that the RBA announced they were keeping the cash rate on hold at 4.35%. Now, the interesting part of all the announcements is actually in all the other details around it. Importantly, the RBA governor said that they did not even consider a cut. They were only considering either leaving it on hold or raising it. That’s important as the commentators start to use more and more language around interest rates remaining higher for longer.

 

5. decision delay

With interest rates being expected to be higher for longer, we’re definitely seeing business owners already starting to take more time to make decisions. They’re hesitating to make big investments within their business, whether that be new employment or big-ticket items like machinery. We’re also seeing a drop-off within the M+A transactions happening around the place.

 

6. international pressures

All of this, of course, leaves business owners in an uncertain economic environment. When that’s combined with the international uncertainty, especially in the US, with the risk of recession in the US, we then have this uncertainty in the stock market as it’s been at record highs and then fallen sharply over recent times. It all leaves us in a situation where we don’t know what the future will hold.

 

My advice to business owners is to get comfortable with the uncertainty. The best thing you can do is make sure you know your business inside and out. That way, you can make the right informed decisions quickly. I hope you’re enjoying our in the loop updates. If you do, please feel free to share them with your friends.

 

we’re here to help

If you have any questions or if there’s anything you’d like us to answer in our next in the loop, please reach out at oneplace@businessdepot.com.au or give us a buzz at 1300 BDEPOT.

 

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