A fall in business confidence seems to have justified the Reserve Bank interest rate cut on Tuesday. Business confidence fell in the last three months of 2015, mostly because of the impact the falling Australian dollar is having on companies that import.
The National Australia Bank quarterly business survey, showed that the December quarter business confidence index fell four points to plus two, which is below its long-run average. NAB said business conditions are struggling to recover. That index was unchanged in the quarter, with the economy’s strength restricted to the construction and service sectors.
‘Construction has been supported by strong investor demand, particularly in medium density housing, driven by low interest rates and foreign buyers,’ NAB said. ‘Outside of construction and services, conditions remain soft in all other industries.’
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