Australian Business Confidence Drops to Six-Year Low

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Australian business confidence fell to the lowest level in almost six years last month in another sign the economy is losing momentum.

The index level dropped to 0 in March from 2 the previous month, the weakest reading since July 2013, a National Australia Bank Ltd. report showed Monday. Confidence fell across most industries, while manufacturing was flat and mining increased, according to the survey conducted March 15-22.

“With forward indicators still looking weak, we will be watching closely over the next few months to assess whether conditions in the business sector weaken further,” said Alan Oster, chief economist at NAB.

The conditions index -- measuring hiring, sales and profits -- climbed to 7 from 4 in February, the survey showed. Conditions represent what businesses are currently experiencing in their operations, while confidence reflects what they expect going forward.

Australia’s economy slowed in the second half of last year as a property slump deepened, spooking households out of spending. The Reserve Bank has remained on the sidelines for the past 2-1/2 years, but is coming under intensifying pressure to resume interest-rate cuts. It will be closely watching the government’s budget Tuesday -- expected to include tax cuts and cash handouts -- to assess the stimulus to the economy.

While all of this has been occurring, hiring has remained robust and the jobless rate dropped to 4.9 percent. The NAB report showed a gauge of employment climbed to 7 in March from 5 in February.

“For now the survey suggests labor market conditions have remained healthy, but we are also watching this closely given it may well be a lagging indicator,” Oster said. “Our overall assessment is that activity likely remained weak in the first quarter of 2019.”

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Chris Bourke

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