Domestic Business Climate is Worrisome Says Analyst

Trading in June fell to a four-year low for the month of June and will most likely be followed by an August interest rate cut, according to experts and analysts from the National Australia Bank (NAB).

In its recent business survey report, the bank noted how bad conditions are in different industries, particularly retail, manufacturing and mining, and even with already lowered interest rates. The Australian dollar also fell, prompting economists from the NAB to say that by all indications, the domestic economy is still not strong.

“It’s a continuation of a downward trend in business conditions that we’ve seen in the last couple of years. … It’s an economy that’s still struggling. It’s growing below trend and I think there are still some areas of quite intense weakness.”

The mining sector is weaker compared to two years ago, and the employment sub-index continues to fall, as job losses rise to 5.6%. Assuming that the conditions remain the same this month, NAB says it may push with its cash rate cut and expect this to continue after August.

Despite this though, the NAB business survey also revealed that business confidence is slightly up, but still subdued.

Roy Morgan Research also did a separate business research report for the month of June that showed an index decline and weaker numbers. A representative of the firm, however, has echoed NAB in saying that business confidence is unwavering, despite the weakened conditions in the local share market.

But some bright spots to this reports indicate that utilities and transportation, as well as the finance sectors, are on a good roll.