Business conditions worsen as non-miners struggle
Conditions for businesses worsened in April, as the gap between the mining and non-mining sectors widened.
The National Australia Bank monthly business condition index fell to zero in April from a reading of 3 in March.
"Conditions deteriorated across all industries in April, with the exception of mining and retail - with the latter's sales boosted by further aggressive discounting," said NAB chief economist Alan Oster.
Business conditions for mining stood at 53 points in April up from 31 in March, while conditions for retail rose to minus-3 in April from minus-15 in March.
Weakness in the Australian economy was the prompt last week for the Reserve Bank to slash its cash interest rate by 50 basis points - the most since the depths of the global financial crisis. Efforts to revive growth at home will be hampered by government efforts to deliver a budget surplus by next fiscal year, and overseas economies are facing slower growth from China to Europe.
NAB's overall trading sub-index fell to 2 in April from 8 in March, while the profitability index turned negative, falling to minus-4 in April from 3 in March.
Retailers such as JB Hi-Fi and Harvey Norman have been forced to cut prices aggressively on goods they import in order to compete with lower prices consumers are increasingly finding online. In the NAB survey, retail prices retreated further in April, dropping 0.7 per cent from a 0.1 per cent easing in March.
Business confidence improved over the same period from 3 in March to 4 in April, likely bolstered by expectations of a rate cut from the the Reserve Bank, NAB said.
While the RBA lopped half a point off its cash rate last week, all three of the four major banks to reveal their new rates failed to pass on the full reduction. The ANZ is scheduled to release its new interest rates on Friday.