{"id":58439,"date":"2011-07-12T12:05:12","date_gmt":"2011-07-12T02:05:12","guid":{"rendered":"http:\/\/www.fnarena.com\/index.php\/2011\/07\/12\/oz-business-confidence-slumps-in-june\/"},"modified":"2011-07-12T12:05:12","modified_gmt":"2011-07-12T02:05:12","slug":"oz-business-confidence-slumps-in-june","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2011\/07\/12\/oz-business-confidence-slumps-in-june\/","title":{"rendered":"Oz Business Confidence Slumps In June"},"content":{"rendered":"

\n\t– Australian business confidence slumps in June
\n\t– Business conditions improve but still below long-term averages
\n\t– NAB pushes out timing of rate hikes
\n\t– Weak growth expected this year, solid improvement in 2012<\/strong><\/p>\n

\n\t
\n\tBy Chris Shaw<\/p>\n

\n\tNational Australia Bank's Monthly Business Survey showed a slump in business confidence in June. The result highlighted a lack of momentum in the domestic sector of the Australian economy as overall conditions remain subdued.<\/p>\n

\n\tBusiness confidence fell to a reading of zero, from plus six previously, while business conditions for the month improved slightly to a reading of plus two from a zero reading in May. Despite the improvement, conditions remain well below the long-term average of a plus six reading and confidence is below its long-term average of plus seven.<\/p>\n

\n\tNAB chief economist Alan Oster<\/span> notes conditions in retail in particular have declined to worryingly<\/span> low levels, while the manufacturing, construction and wholesale sectors also posted poor results. Confidence remains strongest in the mining sector, while conditions are strongest in the finance, business and property sectors.<\/p>\n

\n\tA stronger Australian dollar, ongoing household caution and concerns over the global economic outlook are all reasons for the June decline in sentiment according to Oster<\/span>. Weak business confidence results were similarly recorded in the construction, manufacturing, retail and wholesale sectors.<\/p>\n

\n\tNot all measures fell in June, as the survey showed trading rose to a plus four reading from a plus one result previously, while profitability was unchanged at minus one. New and forward orders continue to contract, while Oster<\/span> notes the stocks index also declined for the month to minus two from a zero reading previously. This implies a softening in near-term demand.<\/p>\n

\n\tOne positive was a slight increase in capacity utilisation<\/span> in June to 81.7% from 81.6% previously, while price inflation was a little softer. Against this, labour<\/span> costs growth rose in June to a reading of 1.3, up from 1.0 previously.<\/p>\n

\n\tIn state terms New South Wales recorded the strongest improvement in conditions, while Victoria also saw a small gain. All the other states recorded declines for June. Business confidence declined in every state during the month.<\/p>\n

\n\tThe continued softness in discretionary spending and some delays in the recovery of coal export volumes has seen Oster<\/span> trim his Australian growth forecasts for the second and third quarters. Strong export prices, mining investment and rebuilding activity in Queensland should deliver a 4Q<\/span> boost to GDP, with Oster<\/span> expecting more solid growth in 2012.<\/p>\n

\n\tForecasts reflect this, Oster<\/span> expecting Australian GDP growth of 1.7% this year, rising to 4.6% in 2012. For the financial years growth forecasts stand at 3.9% in 2011\/12 and then 3.5% in 2012\/13.<\/p>\n

\n\tOster<\/span> expects headline inflation in Australia will begin to ease in the final months of this year as fruit and vegetable prices come down, so by mid-2012 the annual headline inflation rate could be as low as 1.6%.<\/p>\n

\n\tGiven the Reserve Bank of Australia (RBA<\/span>) appears aware of the wide variety in conditions across different industries, Oster<\/span> doesn't expect any rate hike in August as was previously the case. The next increase is now expected in December, with an additional rate rise to be required in May of next year. This will take the cash rate to 5.25%.<\/p>\n

\n\tIn terms of the global economy, Oster<\/span> notes growth is now slowing from the strong pace seen last year, a not surprising outcome given policy is being tightened in many countries and as the Japanese disasters have disrupted global supply lines and oil prices are higher.<\/p>\n

\n\tEven allowing for these issues Oster<\/span> expects global GDP growth will remain above its 4.0% trend in both 2011 and 2012, driven largely by China and the Asian Tiger economies. Developed economic growth is nearer 2.0%, against 6.0-7.0% for emerging economies. Oster<\/span> expects global GDP growth of 4.3% both this year and in 2012.<\/p>\n

\n\t <\/p>\n

\n\tFind out why FNArena<\/span> subscribers like the service so much: "Your Feedback (Thank You)<\/a>" – Warning this story contains unashamedly positive feedback on the service provided.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

National Australia Bank’s Monthly Business Survey for June showed Australian business confidence slumped during the month despite a slight pick-up in business conditions.<\/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\/58439"}],"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=58439"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/58439\/revisions"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=58439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=58439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=58439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}