Australia | Apr 28 2008
By Chris Shaw
As further evidence high interest rates are impacting on the Australian economy the National Australia Bank’s latest quarterly survey of business confidence has recorded one of its largest annual falls in the past decade, falling 10 points in the June quarter to a -4 reading compared to a reading of 10 in the middle of last year.
The bank’s head of Australian economics Jeff Oughton notes the latest reading is close to the levels reached in 2000/01, which was during both the tech wreck (compared to the financial sector crisis this time around) and the last US and global economic slowdown.
The numbers show around 20% of Australian businesses expect a small improvement in conditions in the current quarter, compared to 25% expecting conditions to worsen slightly and around half expecting conditions to remain relatively unchanged. A small percentage expect conditions will become either significantly better or worse by the end of June.
Oughton points out business confidence levels are fairly evenly spread across the various levels of business, meaning both large corporations and small-to-medium sized companies (SME) have a similar view in terms of their respective outlooks.
Specifically he notes small-to-medium sized business with annual turnover in the range of $3-5 million are slightly more confident than during the March quarter but SMEs as a whole have slightly lower confidence levels for the outlook for coming months than do larger corporations.
Those companies in the mining sector continue to display solid confidence levels but elsewhere confidence has fallen, the worst outcomes occuring in the finance and insurance sectors and among property service companies where double-digit falls were recorded.
Also reporting reduced confidence levels were small manufacturers, retailers and larger wholesalers, leaving only the mining, Transport and Storage and Business Services sectors showing positive confidence levels among larger companies and Health, Transport and Storage and Wholesalers recording positive outlooks among the SMEs.