Business confidence fell moderately in September, as conditions weakened, according to the latest NAB business survey.
The NAB Monthly Business Survey and Economic Outlook for September 2009 revealed business confidence fell slightly in September after surging in recent months. Business confidence fell four points to +14 points in September, a reading that predated the RBA’s decision last week to raise interest rates by 0.25 percentage points.
Business conditions also edged lower, down one point to +3 index points, reflecting significant falls in trading (down four to +8 point), and profitability (down seven to +4 points). The figures were offset by a strong reading for employment, up 10 points to -1 index points.
According to NAB chief economist Alan Oster, having seen a remarkable surge in business confidence in the last six months, it was inevitable that weakening was due.
“Certain our view was, and still is, that the readings for confidence are somewhat ‘unrealistic’, especially when compared to business conditions,” he said.
Despite this, there were some bright spots; with credit availability easing for the month of September, with businesses noting it has become easier to find finance. The finance index eased to seven points, down from 18.
According to Oster, the Australian economy will continue to experience strong demand, heavily influenced by the stimulus measures.
Looking ahead, NAB predicts interest rates will continue to increase, reaching 4.25 percent by the end of 2010 and 5.5 percent by the end of 2011.