Businesses’ enthusiasm to invest has sunk to its lowest level in at least 15 years against the back drop of a high Australian dollar and soft growth in non-mining sectors of the economy.
The Australian Chamber of Commerce and Industry (ACCI) survey of investor confidence released today found while business conditions improved slightly in the December quarter, the outlook remained gloomy for future sales and profitability.
‘‘This builds a strong case for the need for further interest rate cuts,’’ ACCI chief economist Greg Evans told reporters in Canberra. ‘‘The economy would certainly benefit from further rate cuts and our expectation is that we will see that throughout 2013.’’
Among the survey’s components, business conditions rose to an index 49.2 points in trend terms in the December quarter from 48 points in the previous three months but remained below the key 50-point mark separating growth from contraction.
Expected business conditions over the March quarter with an index of 46.2 points. Worryingly, the ‘‘climate for investment’’ index shrank to 34.1 points, its lowest level since the survey began in 1998.
‘‘Intentions to invest, employ and borrow, these are at the lowest level in 15 years which is clearly a concern,’’ Mr Evans said.
The survey also showed for the 18th consecutive quarter, business taxes and government charges remained the biggest constraint to investment, followed by insufficient demand across the economy.
Mr Evans said the Reserve Bank of Australia had been looking for economic growth to more broad-based beyond mining.
‘‘That’s not happening at the moment,’’ he said.
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