"Firms are continuing to reassess their lofty election-related expectations given continuing subpar business outcomes"
- Alan Oster, chief economist at National Australia Bank
Weaker investment into mining sector is resulting in a loss of working places, and a deterioration of the labour market is leading to a drop in business sentiment. It was not a surprise that a monthly survey from the National Australia Bank showed a gauge of business confidence turned lower to 5 in November, after a figure of 6 a month earlier. Nonetheless, the index still indicates improvement in business conditions. In regards to the measure of current conditions, it improved slightly from a figure of –4 in October to –3 last month, as companies are benefitting from record-low interest rates.
After a hike in business confidence in September, when Tony Abbott's coalition formed the first conservative government in six years, the index fell in the coming two months, as politicians failed to actualize their promises. Earlier the new Prime Minister pledged to move quickly to boost the decelerating economy by reducing taxes and building new infrastructure. Despite these promises the central bank is not seeing any improvements in the economy, and on the back of disappointing statistics decided to lower its growth forecast for this year and toned down its jobs outlook as well.
The resource-rich economy is currently in its 23rd consecutive year of economic growth; however, it is stuck in low gear, with waning investment in key mining sector and only tentative signs of a vital transition into other sectors of the economy.
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