SYDNEY (Reuters) – A closely watched measure of Australian business confidence edged lower in September while business conditions remained sub-par, indicating aggressive rate cuts have been unable to lift the mood in the corporate sector, a survey showed on Tuesday.
National Australia Bank Ltd’s (NAB)
“While both conditions and confidence remain below average levels of +6 index points – the broad-based trend decline since mid-2018 appears to have slowed,” NAB Group Chief Economist Alan Oster said.
“Rate cuts will help but will lag and with weak consumer (sentiment) and higher global uncertainty, we are unlikely to see a material improvement in the short-term.”
Australia’s A$1.95 trillion ($1.31 trillion) economy has dodged recession since the early 1990s but has now hit a soft patch, with sluggish consumer spending and lackluster wage growth leading to a broader slowdown.
The Reserve Bank of Australia has responded to recent gloomy data by slashing interest rates for a third time this year to a record low 0.75%, with the most recent easing just last week. Financial futures <0#YIB:> imply one more 25-basis-point cut by year-end.
Still, forward-looking indicators in the NAB survey remained subdued in September. Forward orders, historically the most reliable indicator of domestic demand, clocked at -2 from -4 in August.
Measures of inflation were also sluggish with labor and retail costs easing modestly.
In the face of slowing business activity and a pull-back in expansion plans, the employment index rose 1 point to +3.
(Reporting by Swati Pandey; Editing by Christopher Cushing)
