Budget day today, all the bad news (and hopefully some good) will be detailed tonight from 7.30 pm.
But on the eve of this annual announcement there seems to be a bit of sunlight streaming into the recessed economy.
Business conditions are on the improve, having bounced well clear from the gloomy levels set in January and February, according to the latest monthly survey from the National Australia Bank.
In fact it was a noticeable steadying in April with the level of business confidence (a separate measure) also steadying and showing some strength.
The NAB said all components of its business confidence survey rose, including forward orders and employment, which still remains week.
Coming on the even of the 2009-10 budget, when there has been a lot of talk about recession, rising unemployment and a huge budget deficit, the survey results are something of a surprise.
They continue the better tone to data that started with last week’s retail sales figures for March, building approvals and then the rubbery employment figures for April.
The Reserve Bank revealed its new, lowered growth forecasts: a 1.5% contraction in the year to June and 1% for calendar 2009, the same as the NAB’s.
The NAB said in a commentary that the survey results were "consistent with (possibly temporary) moderate growth in demand in early Q2 2009"
That would mean the economy could have already bounced from the slowdown in the March quarter. For how long, that remains the big question.
"Going into the Budget we have also maintained our Australian GDP forecasts for 2009 at -1% and +0.9% in 2010. (The RBA expects growth to be running at 2% in the year to the December quarter of 2010).
"In financial year terms that implies +0.25% in 2008/09 and –0.50% in 2009/10.
"These forecasts reflect the poor start to 2009, together with weaker exports and business investment given the global outlook.
"The extent of recent wealth destruction is also likely to see very low, if any, growth in consumption."
"There is little doubt that the results of the April Survey represent the most encouraging set of numbers for some time.
While it is perhaps unwise to put too much emphasis on one month’s results, the April Survey does seem to point to a stabilisation of confidence at levels around those reported in late 2008 and early 2009 – that is, at levels significantly above the "fear driven" readings of January/February.
"Perhaps even more encouraging was the significant jump in actual business outcomes.
"While Government stimulus packages are no doubt a key driver of the recent jump in activity reported in retail and transportation, at least there are now signs that the falls in demand may be easing.
"Thus trend business conditions have, at least, flattened out. Also other measures of activity, such as capacity utilisation improved. Of course, whether this can be maintained going forward is the critical issue.
The NAB said its forecasts see private demand falling by -2.25% this year, only partly offset by increased public demand of around 5% – including further fiscal spending in the upcoming Federal Budget of around $15 billion: "bringing the deficit to between $65 bn in 2009/10 – depending on the starting point."
"We still see unemployment reaching 6.75% by end 2009 and around 8% by late 2010. The RBA in data watching mode having delivered the bulk of the emergency cuts. Cuts going forward will be data dependent and likely to be delivered in 25 point moves."
The NAB said it now saw the Reserve Bank less likely to cut interest rates "aggressively – we now see the bottom at 2.5% by late 2009. But subject to the Budget this raises downside risks to growth."
The NAB reported that "Business conditions rose a significant 7 points to an overall reading of -10 index points – returning the index back to levels reported in late 2008 and early 2009.
"As such, the trend decline in conditions has at least temporarily stabilised."
It said the survey showed improvement in all components of business conditions: "Trading increased strongly – up 7 points to an overall reading of -3 index points – while profits saw a more moderate improvement – up 2 to -10 index points.
"After very large falls recently, employment bounced 11 points to a still very weak -18 points."
But business confidence remained weaker than conditions, but even there there’s been a noticeable improvement: "down a point to -14 points. The April result was driven by better readings in transport and mining partly offset by falling confidence in wholesaling.
"That said confidence has stabilised at levels significantly up from the excessively negative reading of early 2009 when fear of global collapses reigned."
"As a result, trend confidence was up a strong 5 points to -16 index points – and was broadly based but particularly marked in transport, retail and wholesaling.
"Forward orders rose significantly for the second month in a row – up 7 points in April to -11 points, the best reading since September 2009.
"Capacity utilisation also improved – up 0.8 points to 79.7%. That said capacity utilisation remains at relatively low levels and in trend terms edged lower. Exports jumped significantly in April – up 26 points to -4 index points.
“Capital spending while low also edged higher – up 3 points to -10 index points.
"Reflecting both labour shedding and reduced wages growth, labour costs fell again – by 0.6% bringi
