-Alan Oster, NAB's chief economist
Business confidence in Australia declined in July after two months of upbeat mood, as mining and construction companies became more concerned about China's slowdown. National Australia Bank's monthly survey of over 400 firms revealed the index of business confidence dropped 4 points to +4 in July, while the measure of business conditions also fell 4 points to +6. Confidence is now below its long-term average, although it remains in positive territory. A figure above zero suggests an improvement in conditions, while a reading below zero signals deterioration.
Conditions for employment, forward orders and exports were all weaker in the reported month compared with June, whereas there was an improvement in stocks. The survey's index of sales slid to +11, from a very robust +19 in June, while profitability dropped 3 points to +7. Forward orders eased 3 points to +2, while the index of employment slid into negative territory at -1. Retail prices climbed 0.7%, in line with the official consumer inflation. Labour costs rose just 0.2% on a quarterly basis in the month, keeping with broadly sluggish wage inflation, while purchase costs climbed 0.8%, in line with the previous three months. One positive development for the Australian business community over the past year has been the rapid decline of the Australian Dollar, which has been a particular help to exporters.
© Dukascopy Bank SA