Australian Business Conditions Ease Further

A measure of Australian business conditions eased in September to its lowest in four months as soft forward orders prompted destocking and competitive pricing that appeared to have weighed on profitability.  National Australia Bank’s survey of more than 400 firms showed its index of business conditions fell to +1 from +3 in August, retreating further from July’s multi-year highs.

The report’s index of business confidence dipped 2 points to +5, while its measure of employment fell to -4 from -1, pointing to a subdued labour market.  “The effects of soft national income growth – a function of lower commodity prices, excess capacity and cautious spending behaviour – are being felt across the economy,” said Alan Oster, chief economist at NAB.

“This has been reflected in most industries.”  Looking through the monthly volatility, NAB said while the trend in business conditions still looked reasonable, it will slow significantly if things don’t improve soon.


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