Business uncertainty up as economy slows

The first quarter 2019 results of the Australian Chamber of Commerce and Industry-Westpac industrial trends survey shows a decline in sentiment since December.

"This extends the loss of momentum which emerged late in 2018, with the risk of a further slowing during 2019," says Westpac senior economist Andrew Hanlan.

He said the index was at its softest since the end of 2016 despite manufacturers benefiting from increased government investment in infrastructure.

The lower Australian dollar is supporting exports, but the housing slowdown has deepened, consumers are reining in spending, much of regional NSW is in severe drought and the global economy has lost momentum.

Manufacturers are expecting new orders to further slow in the June quarter.

However, the number of optimists still outweighs the number of pessimists, with 12 per cent more firms expecting the general business situation to improve over the next 12 months, than those expecting it to worsen.

That is well down from 38 per cent a year ago and is the softest reading in four years.

The survey's job tracker points to a modest slowing of jobs growth in 2019.

ACCI chief James Pearson said it was a timely reminder ahead of the federal election due in May.

"The next federal government must take action to lift the cloud of uncertainty that is dominating the investment decisions of many businesses, in particular, small businesses right across the country," Mr Pearson said.

He pointed to action needed on rising energy costs, encouraging business investment, workplace reform and investing in skills.

The survey involves more than 300 respondents from across the manufacturing sector.

Meanwhile, ACCI warned of job losses and small business failures if there was a sudden surge in the minimum wage, or the Fair Work Commission's rules were changed.

Opposition leader Bill Shorten told workers at a Perth factory on Tuesday there were problems with the wage system that he would fix if Labor wins government in May.

"Moderate to reasonable wages growth is a very sound idea for the economy," Mr Shorten said, quoting an open letter from 124 labour market experts.

Mr Pearson said the independent industrial relations umpire should be left to do its work, having delivered wage increases each year for the past nine years.

"If a pay rise is forced on them (small business) that they can't afford, they will go broke and one person's pay rise will end up costing another person a job," he said.

Australian Associated Press