Whilst Westpac Banking Corporation (ASX: WBC) provided a fairly upbeat outlook for the local economy over the next year at its AGM on Friday, the bank's CEO Gail Kelly also cautioned that the outlook for corporate Australia remains uncertain.
The bank recognised that the housing market was picking up speed – particularly in New South Wales – but that conditions for business customers remained mixed. Business confidence might have recovered slightly since the Coalition's federal election win, but the bank announced that that was yet to translate into a major pickup in demand for loans from corporate Australia.
Kelly announced that: "Businesses are waiting to see customers actually go out and spend more and you have to see what sort of Christmas we have and then see into the new year."
Based on a survey of 1000 people undertaken by Commonwealth Bank (ASX: CBA), it looks as though consumer spending could be strong for the period. The survey revealed that more than $18 billion was to be spent this Christmas on presents, holidays, entertainment and other events. This would certainly be good for retailers, including Myer (ASX: MYR), David Jones (ASX: DJS), Woolworths (ASX: WOW) and Wesfarmers (ASX: WES).
A lower Australian dollar would also provide relief for business confidence. After having spent much of the last two years above parity with the U.S. currency, the Aussie dollar is now sitting at just under US90c.
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