Australia’s business confidence turned negative in November for the first time since December 2021 as firms were more concerned about slowing global growth and weaker domestic consumption amid high inflation and interest rates, a closely watched survey showed on Tuesday.
The business confidence index fell to -4 in November from zero a month ago, monthly data from the National Australia Bank revealed. Sentiment was negative in retail, finance, business & property, recreation & personal, and transport & utilities.
Although the business conditions index dropped two points to 20 in November, the score was elevated. Conditions remained strong across industries with only construction and finance, business and property below 20 points in trend terms.
All three subcomponents of business conditions eased by 2 points each, with trading conditions at +28 index points, profitability at +20 index points and employment at +13 index points, the survey showed.
The leading indicator namely forward orders softened to +5 in November, reflecting a more uncertain outlook.
At the same time, cost growth was largely unchanged at elevated levels on both the labor and purchase cost side, and retail prices continuing to rise at a rapid rate.
The gap between current business conditions and business confidence was at a record level in the history of the survey, with the exception of March 2020.
This indicates concerns about the resilience of the economy in the period ahead as inflation and higher rates weigh on consumers and global growth slows.
“Overall, the survey suggests the economy powered through November with consumers still spending in the run up to Christmas,” said NAB Chief Economist Alan Oster.