Business conditions slump in Dec Qtr
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Businesses have recorded their toughest three months of trading since the Australian economy was emerging from the depths of the global financial crisis (GFC), a survey shows.
The National Australia Bank's (NAB) quarterly business survey, released on Thursday, showed both conditions and confidence deteriorated to levels not seen since the first half of 2009.
Business confidence fell to an index level of minus five in the December quarter, the weakest result since the three months to March 2009, while conditions slumped to minus six, a level not seen since the June quarter of 2009.
The negative index readings indicate the number of businesses that believe conditions worsened during the quarter outnumber those that believe conditions improved, and that pessimists outnumber optimists about the outlook for early 2013.
NAB said it appeared concerns about the state of the economy had outweighed any positive effect from recent interest rate cuts.
The Reserve Bank of Australia (RBA) cut the cash rate a total of 1.75 percentage points between November 2011 and December 2012, bringing it to its current level of 3.0 per cent.
"It appears that recent interest rate reductions have done little to alleviate business worries about the currently soft state of the local economy," the bank said in a statement.
"Weak indicators of future demand, global concerns, a still high Australian dollar and fiscal consolidation are likely to be weighing on expectations."
The bank said the weakness in business conditions during the quarter suggested Australia gross domestic product (GDP) growth continued to slow during the quarter.
It said the decline in conditions was spread across all industries, with the sharpest decline occurring in mining - due to lower commodity prices early in the quarter - followed by construction, manufacturing and transport, and utilities.