Australian Business Confidence Starting To Slide

Post by Sharat on June 8, 2010 · Under Australian Economy, Business News · Comment 

The confidence of Australian business fell sharply during the month of May, in fact falling below even long run average levels, as the government’s proposal to impose a resource tax on mining companies weighed on sentiment.

Business confidence declined to 5 index points, 2 points lower than the average of 7 points. The mining industry as well as the wholesale and manufacturing industries were responsible for the decline, according to the results of the survey conducted by National Australia Bank.

Mining led the way with its confidence index diving 30 points to four points.

The instability of global financial markets, and the nose diving of the Australian dollar were also responsible for the fall NAB said.

For the second consecutive month business conditions continued to ease, and fell two points to +6, which was largely in line with the indexes long run average.

“This broad-based reversal in confidence partly reflects disturbances on global financial markets, including concerns about sovereign debt, and associated declines in Australian equity prices. In the case of mining, the announcement of the resource super profits tax would also have been a factor: in seasonally adjusted terms, the decline in mining sector confidence was 30 points, leaving it at +4 index points in May.” NAB said.

According to the results of the survey business confidence seemed to be more homogeneous across industries than in precious survey’s NAB said, with manufacturing, finance, business and property services posting the strongest results.

The wholesale, personal services, recreation and transportation sectors posted the weakest results.

Business conditions however did edge downwards, which can be attributes to a fall in profitability, whilst employment and trading conditions remained mostly unchanged.
NAB said that the results of the survey still implied healthy economic conditions, with the lender expecting 4 per cent annual growth in the economy.

“While higher interest rates may have acted as a drag on discretionary spending in retail and recreation and personal services, they do not account for the strong pick up in construction. The sharp improvement in conditions in mining, possibly reflecting upward renegotiation of some minerals contract prices, may have had an impact on mining-related construction activity, although this is conjectural.” NAB said.

Compare Australian Car Loan Deals

Bookmark and Share

Related posts

Tags: , , ,

Comments

Leave a Reply







Sponsored Ads