Business confidence has fallen to an eight-month-low and business conditions remain weak despite the decline in the Australian dollar and falling interest rates, a monthly survey has found.
Confidence among firms was pulled down to their lowest level since November by weakness in business activity and profitability, and was particularly poor in mining, the NAB's monthly business survey released today reported.
Retail was the only industry that reported a lift in confidence, following improved July sales figures.
The softness in the economic indicators pointed to further signs that Australia's growth was "grinding lower", NAB said.
"We see GDP growth softening to 2.2 per cent in 2013, before rising to 2.6 per cent in 2014, and a significant deterioration in the labour market is expected this year (unemployment above 6 per cent and next. Our forecasts have been revised a touch lower – with downside risks building."
In the Treasury's Pre-Election Economic and Fiscal Outlook released today, GDP was forecast to grow by 2.5 per cent in 2013-14, with the jobless rate rising to 6.25 per cent by the June quarter of next year. The forecasts matched the government's mini-budget projections.
Business conditions were the "very poor" in manufacturing, construction, mining, retail and wholesale. The expected peak in the mining investment boom was reflected in the weak conditions in Western Australia, which fared the worst amongst the states.
"Overall, the survey implies underlying demand growth and GDP six-monthly annualised of around 2.5 per cent in the June and September quarters," NAB said. "Our wholesale leading indicator implies little improvement in near-term activity."
The monthly survey contrasted with Roy Morgan Research's report for July, which found that business confidence among the 2681 firms interviewed rising for the first time in fourth months. Consumer confidence also rose, from 114.6 in June to 116.2 in July.
The report found that the finance and insurance sectors was the most confident, followed by the education and training sectors and the information media and telecommunications industries.
The manufacturing and construction industry registered below average confidence levels, while the retail sector declined to its lowest level for the year.
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