Even before the floods in December and January, business confidence was already softening according to the quarterly business survey released by the National Australia Bank on Tuesday. The survey of 900 businesses found there was a drop in the business confidence index from 9 points in the third quarter to 5 points in the fourth quarter, with a decline in profitability, sales and trading being significant factors.
“The survey suggests that optimism about the outlook was on the wane even before the severe floods in December and January,” said NAB.
The mining sector bucked the trend, however, so there were no surprises when Western Australia came out on top as the most confident state. Rising coal and iron ore prices in October helped. Confidence in property services and recreation also improved, while agriculture, finance, transport, business services and utilities declined sharply.
The short to medium term view of business conditions was also weaker, possibly a result of the interest rate increases announced in November, but longer-term the employment outlook remains strong with an index of 17. Plans to spend on capital works over the next 12 months were unchanged in the December quarter.
