Australia Business Confidence October 2018


Australia: Business confidence drops to over two-year low in October

November 14, 2018

The business confidence index produced by National Australia Bank (NAB) declined to 4.2 points in October from September’s revised 6.3 points (previously reported: 6.2 points). The index thus moved slightly below its long-run average and nevertheless remained above the zero-point threshold, indicating that Australian businesses are largely optimistic regarding economic conditions.

Looking at the sector-by-sector picture, the mining sector was the most optimistic by far, followed by the manufacturing and construction sectors. The retail sector, on the other hand, was the least optimistic, due to the sector’s recent weak performance. That said, all sectors remained in positive territory. Meanwhile, business conditions also weakened in October, as a result of a deterioration in employment and profitability, only partially offset by more positive trading conditions. The lower but still positive reading for the employment index indicates unemployment will decline further in the months ahead, although the pace of job creation is likely heading toward a deceleration. The index on forward orders remained stable in positive territory, while capacity utilization edged down in October. All-in-all, business conditions deteriorated but remained above their long-run average, which bodes well for business investment this year.

Australia Fixed Investment Forecast

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 October 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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