Australian Business Confidence Plummets to Lowest on Record

(Bloomberg) --

Australian business confidence plummeted in March to the lowest level in the history of the survey as industry shutdowns designed to stem the spread of coronavirus sent the economy into a tailspin.

A gauge of sentiment slid to -66 from -2 in February, the biggest decline on record, National Australia Bank Ltd. said Tuesday. The conditions index -- which measures hiring, sales and profits -- slumped to -21 from 0.

“Recreation and personal services recorded the largest hit, unsurprising given the effective shut down of these sectors,” NAB said in a statement. “Forward orders collapsed to their lowest level on record, while capacity utilization also saw a sharp decline. Overall, the decline in forward orders and business conditions imply a large fall in GDP in the next 6 months.”

Australia’s Treasury forecasts unemployment will almost double this quarter to 10% and would’ve gone to 15% if not for fiscal stimulus measures. The government and Reserve Bank have assembled a fiscal-monetary shot worth A$320 billion ($205 billion), or about 16.4% of gross domestic product.

The survey saw a sharp decline in the employment index to -20 in March from 1, which NAB said is consistent with “a notable tick up” in unemployment. Economists forecast 30,000 roles were lost in March and the jobless rate rose to 5.4%, ahead of data Thursday.

“While it is unlikely that the unprecedented policy support targeted at the business sector will be unable to offset the near-term pain, it will be very important in supporting activity in the recovery phase,” said Alan Oster, NAB’s chief economist. “There is significant risk that a blow to confidence of this magnitude for an extended period could lead to ongoing fallout in terms of employment growth and capital expenditure by business.”

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