{"id":54178,"date":"2008-04-29T10:47:44","date_gmt":"2008-04-29T00:47:44","guid":{"rendered":"http:\/\/www.fnarena.com\/index.php\/2008\/04\/29\/oz-economy-slowing-faster-than-expected\/"},"modified":"2008-04-29T10:47:44","modified_gmt":"2008-04-29T00:47:44","slug":"oz-economy-slowing-faster-than-expected","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2008\/04\/29\/oz-economy-slowing-faster-than-expected\/","title":{"rendered":"Oz Economy Slowing Faster Than Expected"},"content":{"rendered":"<p>  <title>nab-qtrlysurvey<\/title><\/p>\n<p>By Chris Shaw<\/p>\n<p>As FNArena reported yesterday the National Australia Bank quarterly<br \/>\nsurvey of business confidence showed a decline to levels last seen in<br \/>\n2001, confirming both large and small businesses view the outlook as<br \/>\ngetting significantly tougher in coming months.<\/p>\n<p>More details of the survey have now been released and they show along<br \/>\nwith the decline in confidence a significant fall in business<br \/>\nconditions, down six points to a reading of +13, an outcome the bank&#8217;s<br \/>\ngroup chief economist Alan Oster suggests is consistent with the<br \/>\nslowing in demand growth to 3.5% experienced in the first quarter of<br \/>\nthe year.<\/p>\n<p>As demand growth fell so too did trading and profitability, the former<br \/>\nfalling 12 points to a reading of +17 and the latter down 11 points to<br \/>\na +8 reading, though employment wasn&#8217;t so affected and fell only three<br \/>\npoints and remains relatively strong at a +11 reading.<\/p>\n<p>A further issue Oster notes is companies continue to have difficulties<br \/>\nfinding suitable labour, as more than 70% of companies confirming they<br \/>\nwere having trouble in this regard, an increase of more than 4%. This<br \/>\nties in with still high levels of capacity utilisation, which even<br \/>\nafter a 0.3% fall&nbsp;in the period remains&nbsp;high at<br \/>\nalmost&nbsp;84%.<\/p>\n<p>Oster also notes retail price pressures continue to accelerate and this<br \/>\nunderscores an expectation inflation will stay at around 4% through<br \/>\n2008, leading him to suggest the Reserve Bank of Australia&#8217;s bias<br \/>\nremains to the upside with respect to rates in coming months.<\/p>\n<p>While further hikes in rates are not expected Oster does see a chance<br \/>\nof one further increase if there is no slowing in demand in coming<br \/>\nmonths, while longer-term the bank sees rate cuts beginning in 2009 and<br \/>\nexpects&nbsp;cash rates to be back down at 6% by late next year or<br \/>\nearly in 2010.<\/p>\n<p>Overall the data leads Oster to suggest the Australian economy may be<br \/>\nslowing faster than had been expected, with clear signs the increases<br \/>\nin interest rates are impacting on rate sensitive sectors of the<br \/>\neconony and on the consumer. While there are no changes to his<br \/>\nforecasts of GDP growth of 2.75% both this year and in 2009 Oster<br \/>\npoints out the risk now appears to be to the downside.<\/p>\n<p>Stronger commodity prices will continue to boost Australia&#8217;s terms of<br \/>\ntrade and this plus the combination of tax cuts and a stronger<br \/>\nagricultural sector should prevent any hard landing for the Australian<br \/>\neconomy, though domestic demand growth should slow from more than 5%<br \/>\nlast year to closer to 3.5% this year and a little less than that in<br \/>\n2009 on the bank&#8217;s numbers.<\/p>\n<p>Globally the bank&#8217;s forecasts are unchanged, with forecast GDP growth<br \/>\nof 3.5% this year and 3.75% in 2009, which Oster notes implies a period<br \/>\nof sub-trend growth rather than&nbsp;a global recession. The US<br \/>\nwon&#8217;t help given the bank is forecasting just 1.25% GDP growth this<br \/>\nyear and no strong growth until the second half of 2009, which means<br \/>\nfurther rates cuts of as much as 50 basis points are likely by mid-year.<\/p>\n<p>While the UK and Europe won&#8217;t be immune to any slowdown the bank sees<br \/>\nmodest improvement in growth in both regions in 2009, while slightly<br \/>\nlower but still strong growth from China and India support the overall<br \/>\nglobal growth outlook.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A look behind the numbers of yesterday&#8217;s NAB business confidence survey.<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6],"tags":[21],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/54178"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=54178"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/54178\/revisions"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=54178"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=54178"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=54178"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}