Australia Business Confidence December 2018


Australia: Business confidence declines again in December

January 29, 2019

The business confidence index produced by National Australia Bank (NAB) declined to an almost three-year low 2.8 points in December from November’s revised 3.4 points (previously reported: 3.2 points). The index thus moved further below its long-run average and nevertheless remained above the zero-point threshold, indicating that Australian businesses are mostly optimistic regarding economic conditions.

Looking at the sector-by-sector picture, the deterioration in confidence was broad-based. The mining sector remained the most optimistic, although confidence fell notably in the month. Confidence also declined in the manufacturing, construction and transport and utilities sectors, while it increased in the retail sector. Meanwhile, business conditions nosedived in December, as a result of a deterioration in trading conditions, profitability and less positive employment expectations. The index on forward orders declined and moved to contractionary territory, and capacity utilization inched down in December. All-in-all, worsening business conditions point to a weakening level of private-sector activity.

FocusEconomics Consensus Forecast panelists expect fixed investment to expand 2.2% in 2019, unchanged from last month’s estimate, before accelerating slightly to 2.5% in 2020.

Author: Massimo Bassetti, Senior Economist

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Australia Business Confidence Chart

Australia Business Confidence December 2018

Note: Index of business sentiment; 0-point threshold indicates equal number of positive and negative responses.
Source: National Australia Bank’s Monthly Business Survey.

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