Business conditions are now at the weakest seen in three years, with mining and construction down sharply, according to today’s NAB Monthly Business Survey.
The survey found business confidence deteriorated sharply in May, with businesses now expecting weaker near-term activity, despite a 50 basis point rate cut early in May and 100 basis points of cuts over the six months to May.
Businesses appear to have been concerned about euro zone and global growth issues.
The Federal Government budget was viewed very unfavourably by businesses.
The survey found the deterioration in activity was broad-based across industries, trading profits and, especially, employment.
The significant deterioration in employment and a lagging indicator of demand suggests the weakness in activity has begun to bite and employers are preparing for a more subdued outlook as forward orders and stocks trend lower, and capacity utilisation remains worryingly low.
Overall, the survey implies underlying demand growth in the June quarter may slow to around 3%, while gross domestic product growth may slow to around 2%.
This article first appeared on SmartCompany.