Consumer Confidence Down as Business Suffers New Low

December 13, 2016

Consumer Confidence Down as Business Suffers New Low | AIA

As Consumer Confidence begins to fall, business in Australia is experiencing a new low.

This has come hot on the heels of the last week’s quarterly GDP contraction, signally further downturns in Australian business.

The National Australia Bank reported a fall to +5 in its business conditions index during November which had previously sat at +7. This is a drop to its lowest level since April in 2015.

Explanation rests in falling profits, particularly in the retail industry.

Though results could be worse, this does raise the question about the short-term direction of the economy.

The National Australia Bank believes that confidence remains steady with the monthly index edging up to +5 (from +0.4) in November, however there are still concerns that growth will be lower than previous expectations. Many anticipate that the Reserve Bank may consider cutting rates twice in the new year.

“At face value, confidence is consistent with an annual rate of GDP growth of between 2.5 per cent and 3.0 per cent rather than the third quarter’s 1.8 per cent,” economist Paul Dales said. “As such, it is not sending a recession warning. Indeed, during significant downturns, business confidence usually falls sharply.”

But, according to the <a href=”http://www.smh strattera 40” target=”_blank” rel=”nofollow”>Sydney Morning Herald, last week’s shock contraction in the economy does seem to have knocked consumer confidence, pulling ANZ’s weekly index down by a sharp 4.4 per cent to its lowest level since May.

The Reserve Bank of Australia remains optimistic on Australia’s economic future. Many believe the Reserve Bank will play down the need for any further easing after cutting rates in May and August.

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