Business conditions the worst in seven years: Economy roundup

The NAB’s latest business survey shows business conditions plunged again in July as sales, profits and employment expectations all fell.

The NAB’s latest business survey shows business conditions plunged again in July as sales, profits and employment expectations all fell.

Business conditions fell by 5 points to an index of -5 in July. The index now sits 25 points lower than its recent peak in October 2007. NAB says business conditions are now slowing at a rate faster than that leading into the post-Olympic 2000 slowdown, and not seen since the early 1990s.

“As well as the speed of the deceleration, the view of business that the process is far from finished is somewhat concerning – with forward orders still slipping and confidence remaining at low levels,” NAB economist Alan Oster says.

“A profit squeeze on business is further highlighted by the continuing rise in purchase costs which, in current circumstances, is not able to be fully passed on.”

The survey results support yesterday’s gloomy Statement on Monetary Policy from the Reserve Bank, which highlighted a sharp drop in business borrowing as higher interest rates and falling consumer spending hit small and medium companies.

The sharemarket has been quiet this morning after a subdued night on Wall Street. The benchmark S&P/ASX200 index was up just 0.5 points to 5026.6 at 12.00 noon AEST.

In corporate news, engineering giant WorleyParsons reported a 53% jump in full-year profit for 2007-08 to $343.9 million, thanks to the continuing boom in mining and energy projects.

Hearing implant company Cochlear has lifted its annual profit by 15% to $115.2 million on the back of record sales of its cochlear implant units. The company also says it expects to again post double-digit earnings in 2008-09.

Australasian radio and newspapers group APN News and Media Ltd has reported a 0.7% fall in its first-half earnings and also announced the acquisition of Media1, New Zealand’s third largest outdoor advertising business.