Business confidence not boosted by rate cuts
(12 July 2012 – Australia) Rate cuts have done little to curb the fall in business confidence, this month’s National Australia Bank (NAB) Business Survey showed.
It showed the business confidence index had dropped one point to negative three points.
The NAB survey found that while business conditions improved modestly over June across a variety of industries, the divergence between states has become more pronounced.
Mining conditions remain the strongest, but still below the heights reached earlier this year, while the construction industry is still reeling from the sudden downturn in the May period.
Employment conditions remain weak in June and the demand for credit by consumers also fell as people tightened their belts.
The NAB said ongoing economic uncertainty engulfing Europe and concerns about the introduction of the carbon tax on 1 July, may have overshadowed recent interest rate cuts.
The Reserve Bank of Australia (RBA) cut the cash rate by 0.50 percentage points in May and another 0.25 percentage points in June to 3.50 percent. It held the rate at its July board meeting.
'The RBA's most recent 25bp rate cut in June appears to have provided little additional support to confidence, with businesses perhaps instead focusing on the likely implications of the carbon tax and MRRT, effective 1 July 2012,' the NAB said in a statement.
The NAB has kept its GDP (gross domestic product) forecasts unchanged at 3.1 percent in 2012, and 3.3 percent in 2013.
The NAB survey found that while business conditions improved modestly over June across a variety of industries, the divergence between states has become more pronounced.
Mining conditions remain the strongest, but still below the heights reached earlier this year, while the construction industry is still reeling from the sudden downturn in the May period.
Employment conditions remain weak in June and the demand for credit by consumers also fell as people tightened their belts.
The NAB said ongoing economic uncertainty engulfing Europe and concerns about the introduction of the carbon tax on 1 July, may have overshadowed recent interest rate cuts.
The Reserve Bank of Australia (RBA) cut the cash rate by 0.50 percentage points in May and another 0.25 percentage points in June to 3.50 percent. It held the rate at its July board meeting.
'The RBA's most recent 25bp rate cut in June appears to have provided little additional support to confidence, with businesses perhaps instead focusing on the likely implications of the carbon tax and MRRT, effective 1 July 2012,' the NAB said in a statement.
The NAB has kept its GDP (gross domestic product) forecasts unchanged at 3.1 percent in 2012, and 3.3 percent in 2013.
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