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Has the tide turned for corporate Australia?

Sydney Harbour Bridge
Ales Kramer | E+ | Getty Images
Sydney Harbour Bridge

A string of negative headlines out of corporate Australia in recent weeks threatens to undermine business sentiment, casting a cloud over Australia's economic outlook.

Holden, a subsidiary of General Motors and an iconic brand for locals, said last week that it would stop making cars in Australia by the end of 2017 in a move that would lead to almost 2,900 job cuts.

(Read more: GM says to end manufacturing in Australia)

Just a few days earlier, national carrier Qantas issued a profit warning amid a "marked deterioration" in market conditions and said it would axe 1,000 jobs.

The news from two of Australia's most well-known brands is not a good sign for business confidence, which had received a boost following a change in government in September elections, analysts said.

(Read more: Australia's election is over, now what for the economy?)

"There is a risk that the recent news from a major airline and manufacturer is going to drag on business sentiment and that may be one of the things that constrains Australia's growth performance in coming months," said HSBC Chief Australia Economist Paul Bloxham.

National Australia Bank said last week that its measure of business sentiment ticked down a point to 5 in November. That's off a three-year high hit in October after the September election results.

Analysts said the concern was that worries about job cuts in the automobile and airlines sectors have impacted broader business confidence.

"If you just take Holden on its own; yes there are only 3,000 or so employees directly employed but there is a deep supply chain under that," John Spoehr, an associate professor at the University of Adelaide told CNBC Asia's "Cash Flow" last week.

"We commissioned some recent modeling that showed around 65,000 employees are associated with that industry in one form or another. So it's a very substantial sector with deep roots into south Australia, Victoria and New south wales," he said.

David Walker, head of equities research at StocksInValue.com.au, added: "Australia is losing employment in manufacturing, media, agriculture and that's one reason why our unemployment rate is heading above 6 percent next year." Australia's unemployment rate is at 5.8 percent.

(Read more: Australia to be 'odd one out' in 2014: Goldman Sachs)

The big picture

Analysts said that while the recent headlines out of corporate Australia did not make for good reading, there were reasons to remain upbeat about the outlook.

Record low interest rates, for instance, should help underpin economic growth next year, they added. The Reserve Bank of Australia's key interest rate is at 2.5 percent.

Credit ratings agency Standard & Poor's has said that the troubles facing Qantas and Holden should not be viewed as sign that the nation's economy is derailing, The Sydney Morning Herald reported on Monday.

Open for business?

Still, the government may need to do more to bolster business sentiment in the months ahead, analysts said.

Prime Minister Tony Abbott declared that Australia was "open for business" after his Liberal-National Party coalition swept to power in September. That view has been called into question after the government last month blocked a $2.6 billion takeover of Australia's GrainCorp by U.S. agribusiness giant Archer Daniels Midland.

(Read more: Australia spurns ADM's $2.6 billion GrainCorp takeover)

"There does appear to be less clarity about exactly how open to business we are," said HSBC's Bloxham.

In recent days Abbott has said the government was considering lifting foreign ownership restrictions for Qantas, according to Australian media.

Time will tell if such measures can help turn around the fortunes of the embattled airline.

"I wouldn't touch it [Qantas] with anyone's money. We've had it as a long-term avoid for as long as I can remember," said Walker at StocksInValue.com.au.

— By CNBC.Com's Dhara Ranasinghe; Follow her on Twitter

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