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Business confidence moved down to pre-financial crisis levels
October 27, 2010 – Survey indicated that the business confidence in the quarter of September rose to its highest levels ever since the pre-global financial crisis (GFC) days of the year 2007. However, this condition eased a little bit in the same period.
The National Australia Bank the perceived improvement in the profitability was counterbalanced by weaker employment with the trading conditions remaining unchanged. The NAB also stated that the Reserve Bank (RBA) will probably increase the crash rate before Christmas and foresees a rate of 5.5 per cent by September 2011. Currently, the RBA cash rate is at 4.5 per cent.
The NAB quarterly business survey indicated that business conditions dropped one index point to five in the September quarter while the business confidence increased to six points to nine points.
Any reading that is above zero shows that optimists outweigh pessimists.
According to NAB chief economist Alan Oster, although the financial markets were perceived to be calmer compared to the June quarter, there were concerns raised regarding the pace of the recovery in the US and China. He added that there were signs of weakness in the domestic economy which appeared along with the slipping of forward orders into negative territory and the decline in the capacity utilization.
There was also a decrease in the mining and finance sectors and recorded to be weakest in retail, wholesale, and agribusiness.
However, conditions were seen to be strongest in the transport and recreation sectors as stated by the report.
The beginning of 2010 recorded a reduction to $7000 in the first home buyers grant after it was reduced from $14,000 from its $10,500 in October of last year.
The said decrease caused the property sector a sharp fall in its business conditions which included property services, this according to Mr. Oster.
Reports stated that a strong improvement in confidence was seen in anticipation of greater public sector activity. The said increase in business was broad-based, having the transport and property services as the strongest while the recreation declining due to the weakest confidence.
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