The conundrum that is Australia’s multi-speed economy continues to be underlined by soft business conditions and confidence, with leading economist Alan Oster describing several consumer-reliant sectors as “sick”.
While business conditions improved slightly in November, NAB’s monthly business survey shows they remain stubbornly below long-term averages.
Business confidence fell for the third straight month and is also stuck below the long-term average level.
Oster told SmartCompany this morning the survey highlights the “multi-speed” nature of the Australian economy.
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While conditions fell sharply in retail, mining, wholesale, property, finance, business and transport, they improved sharply in construction, recreation and manufacturing.
“The big message is how multi-speed this economy is,” Oster says.
“We were expecting the second half of the year to be weaker than the first half, but it would be nice if we had of seen signs of some strength. The reality is this is a soft survey.”
Oster describes the retail sector as “sick”, with conditions the worst they have been for two years.
“We know deep down that if you are in the household sector, or clothing, textiles and footwear, you are doing even worse. Anything the consumer can make a decision that they don’t want to buy, they just aren’t doing it.”
He also points out that new orders remain weak, pointing to a soft start to 2011.
“We still have the view that through 2011 the economy will get going, but there is sufficient softness around, together with the high Australian dollar, that mean the RBA is going to be on hold for some time.”