Business conditions in February fell to the lowest point since June 1992, when Australia was in the depths its last major recession. NAB’s monthly business conditions index slipped a further nine points in February, taking the index to -20 points.
But business confidence actually improved slightly, rising 10 points to -22 points as a result of the Government’s second stimulus package. Despite the rise, business confidence remains at a level that has not been seen since the recession of the 1990s.
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NAB chief economist Alan Oster says the continuing fall in business conditions are worrying.
“There is little in the survey to suggest that activity levels might be bottoming, with continuing falls in mining and manufacturing activity very prominent.”
Perhaps most concerning is the continued trend of record low measures of employment, forward orders and capital expenditure. Capacity utilisation also fell below 80% for the first time since 2001, indicating that companies are pulling back sharply in a bid to cut their cost base and survive.
Exports also remain at historical lows.
“While much of the downturn to date has driven out of the domestic economy, the survey is increasingly showing signs of the impact of global forces,” Oster says.