Face Value: business leaders are betting we will spend more

When Australian companies report results they typically include an outlook statement from the business’ leaders, giving investors some guidance about their expectations for the future. They issue these forward-looking statements with some caution as investors might rely on them, and the law requires that they be based on “reasonable grounds”.

The Conversation’s Face Value uses sentiment analysis to try and determine how Australian business leaders are feeling about the future.

 

A contradiction is emerging between how consumers should be feeling and what the heads of companies expect them to do. What we know about low wages growth and underemployment seems to suggest households would be tightening the purse strings but the sentiment of business leaders is very positive in sectors relying on consumer spending.

Wages are struggling to keep pace with the prices of the things we buy and average hours worked (per worker) have also been trending down or flat at best. This is not a picture of robust consumer finances.

On top of this retailers are facing the threat of competition from US giant Amazon. Yet according to our analysis of the outlook of leaders of Australia’s ASX 200 companies, positivity has increased. Read more

Ross Guest and Ben Hackey – The Conversation – 1 Sep 2017