Business planning, Finance, Growth, Legal

Business confidence falls for third straight month

StartupSmart /

Business confidence in November declined for the third consecutive month, down by two points to six points, according to NAB’s Monthly Business Survey.

 

The survey shows conditions deteriorated sharply in mining, retail, wholesale, transport and utilities, and finance, business and property. Conditions only improved in construction, recreation and manufacturing.

 

According to the survey, cashflow was strongest in transport and utilities, and recreation and personal services, and weakest in retail and construction.

 

According to NAB macro economist John Sharma, ongoing poor retail conditions appear to be impacting on the wholesale sector, where conditions have declined steadily from seven index points in July to -10 points in November.

 

“Despite the weakness in retail and wholesale, transport and utilities conditions remain the strongest. However, the September quarter SME survey showed that smaller transport operators are struggling,” he says.

 

“Although manufacturing conditions improved overall, the sector remains weak. Those parts of manufacturing associated with construction… were noticeably weak.”

 

“Conditions in recreation and personal services remain solid despite pressures on inbound tourism. This may reflect the recent strength of cafes, restaurants and takeaway food services.”

 

According to NAB, business conditions were strongest in mining state Western Australia, followed by South Australia. Conditions were weakest in New South Wales, Queensland and Victoria.

 

NAB states: “It is weakest in Queensland, where the impact of the high Australian dollar on tourism and an oversupplied property market appear to be significant.”

 

“Trend confidence in New South Wales and Victoria is a tad below the national average. In seasonally adjusted terms, confidence fell back sharply in Victoria and South Australia.”

 

“Confidence also fell in Western Australia and Queensland, but rose in NSW.”

 

According to Sharma, we can expect growth of around 4% in 2011 although the construction sector remains soft, and retail and wholesale are very depressed.

 

“The impending mining investment and export boom should provide a spectacular ride, but the reality is that the train is still yet to leave the platform,” he says.

 

NAB doesn’t expect another interest rate rise until May 2011, of around 5%, followed by a peak of 5.25% by August.

 

“Continued strong exchange rate outlook should keep inflation under better control; core inflation will edge up and stay around 2.75% through to the end of 2012,” it says.

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