Australia Business Conditions Weaken Further as Jobs Slump
Australia Business Conditions Weaken Further as Jobs Slump
(Bloomberg) --
Australian business conditions deteriorated further in April, weakening across the trading, profitability and employment segments as large tracts of the economy were shuttered to contain the coronavirus.
The conditions index -- which measures hiring, sales and profits -- slumped to -34 from -22 in March, National Australia Bank Ltd. said Tuesday in a statement. Business confidence retraced some of its massive loss in March, rising to -46 in April from -65. Employment conditions plunged to -35 from -20, to be near its lowest level on record.
“The decline in the employment index is consistent with a significant shedding of employees by respondents,” said Alan Oster, chief economist at NAB. “This is consistent with other measures we have seen, such as the Australian Bureau of Statistics payrolls data. Overall the survey suggests that the unemployment rate will rise substantially in April.”
Australia’s central bank predicts unemployment will climb to 10% in June as the economy contracts by 10% from peak-to-trough during the lockdown. The government’s JobKeeper initiative that keeps workers attached to employers during the shutdown, and an expected drop in labor force participation, are likely to limit some of the increase in the official jobless rate.
Economists predict 575,000 jobs were shed in April and the unemployment rate surged to 8.2% from 5.2% in March, ahead of labor force data due Thursday. The participation rate is expected to have fallen to 65.3% from 66%.
“While it is now likely that coronavirus containment measures could well ease earlier than expected, we expect this to be a gradual process,” Oster said. “We also worry the hit to confidence will have some ongoing impacts to hiring and capex which could see a drag on growth for some time.”
NAB’s survey of more than 400 firms was conducted April 23-30.
The Australian dollar was little changed after the release, trading at 64.43 U.S. cents at 11:37 a.m. in Sydney.
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