Business owners nervous about the future: Economy roundup

Business confidence is expected to fall to its lowest level since 2000 in September as consumer nerves, high fuel and food costs and sharemarket wobbles take their toll.

Business confidence is expected to fall to its lowest level since 2000 in September as consumer nerves, high fuel and food costs and sharemarket wobbles take their toll.

The NAB Business Confidence Expectations Index, a measure of expected industry conditions in the September quarter, fell four points to -8, 18 points lower than this time last year.

If recent trends hold, businesses are likely to find that conditions in the three months to September turn out to be worse than they expect, suggesting many are likely to continue to do it tough.

SMEs and larger businesses in the residential construction, household goods, car sales, property services and transport sectors are most pessimistic, while those in mining and health are more positive.

The tough times in the residential property sector are reflected in new home sales data released today showing the industry failed to recover significant ground in June.

According to the Housing Industry Association, new home sales lifted 4% in June, leading the sector up just 0.4% over the first six months of June.

“There has been a marked loss of momentum in new home building over 2008 to date,” HIA chief economist Harley Dale says. “Australia is seeing strong demand for housing fuelled by record year-on-year immigration. Clearly production of new housing needs to at least capture this demand.”

Auction clearance results for the weekend were mixed. In Melbourne 64% of 465 properties cleared, up 1%, but in Sydney the market had a horror weekend with clearance rates falling from 51% to 43%. Adelaide experienced a slight improvement, up 1% to 47%, while in Brisbane in the clearance rate of properties for auction dropped from 45% to 36%.

ANZ’s announcement of $1.2 billion worth of provisions has sent banking shares into a tailspin, but speculation about a takeover of coal mining company Felix Resources (up a whopping 10.9% this morning to $19.50) helped boost the resources sector and limit the damage to the wider market. The benchmark S&P/ASX200 index fell 72.7 points or 1.5% to 4897.8 by 1215 AEST, adding to a 3.4% fall on Friday.

Meanwhile, the Australian dollar has fallen to a three-week low of US95.45c after the bad news from ANZ. Investors believe the economic slowdown could be worse than first thought, limiting the chance of further rate hikes.

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