Australia’s economic slowdown is likely to be become more entrenched with business conditions and confidence falling further last month.
The highly-respected NAB business survey found there had been a broad-based decline in conditions, with key forward-looking indicators pointing to ongoing weakness.
The collapse in the survey’s measures late last year were an early indicator of the far weaker than expected fourth quarter GDP results showing the economy grew at just 0.2 per cent over the three months to January.
“The decline in conditions was relatively broad-based in the month and continues a relatively sharp decline over the previous six months,” NAB chief economist Alan Oster said.
“The decline in confidence was more modest but the series has now been below average for some time.”
The greatest concern lies in the immediate future prospects for business, with the forward orders index and capacity utilisation falling further and both now below their long term averages.
Profitability and trading (sales) conditions also slipped below their long-term averages.
“This may have important implications for both future investment and employment decisions of business,” Mr Oster said.
The survey reported a particularly sharp decline in conditions in construction and mining.
However, retail declined further and remains the weakest industry by “a significant margin”.
The weakness is broad-based across retail sub-industries, but weakest in car retailing and household goods.
Jobs remained the one bright spot in the numbers, with the employment index remaining fairly resilient in the face of clearly deteriorating conditions and falling confidence.
However, Mr Oster said this may not last as labour demand decisions typically lag economic activity.