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Business confidence fell in November as business outcomes continue to fall short of high election-related expectations, according to the latest NAB monthly business survey.
The business confidence index dropped one point in November to positive 5, down 7 points from September this year.
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While business conditions improved one point to negative 3, they remain well below the series' long-run average of zero and the monthly survey average of positive 5 points since 1997.
While the new government, more accommodative monetary conditions and strong asset price growth have put upward pressure on confidence, forward indicators remain weak, dragging overall business confidence down.
“Forward indicators remain soft, with low capacity utilisation levels, no improvement in forward orders and stocks. Employment conditions fell heavily, implying further jobs shedding. Falls were especially large in wholesale and finance,” the NAB report states.
Meanwhile, it was a good month for confidence in trade-exposed industries, with manufacturing up 5 points, mining up 2 points and recreation and personal services up three points, largely as a result of a weaker Australian dollar.
As part of the survey, NAB released its forecast for the domestic economy, predicting at least one more rate cut in the future, with unemployment expected to reach 6.5 per cent by late 2014.
“[The] rate outlook [is] unchanged with RBA watching economy before another cut in May, although some risk of an earlier or second cut — labour market will be key to watch,” the report said.
