Business confidence continues to fall

Released yesterday, the NAB monthly business survey found that a drop in profits and employment nationally drove conditions lower.

“Forward indicators are soft, but trend conditions in the ‘bellwether’ wholesale industry are a little less weak,” according to the report.

The multi-year high for business conditions in July appears to have been a ‘flash in the pan’, the report added.

“The business conditions index dropped two points in September (following a five-point decline) to +1 index points,” it said.

“At this level, business conditions are still well up on 2013 averages, but below the long-run average of the series (+5).

“The upward trend in the index has stalled, with very little impetus from forward indicators to suggest the trend will resume its upward trajectory in the near-term.

“The effects of soft national income growth – a function of lower commodity prices, excess capacity and cautious spending behaviour – are being felt across the economy.”

The NAB report highlighted the recent rise in house prices in Sydney, Adelaide and Brisbane, but stressed housing credit growth remains subdued.

“According to RP Data-Rismark, dwelling prices rose again at a solid rate in Sydney (0.8 per cent) and rises were also recorded in Adelaide (0.9 per cent) and Brisbane (0.7 per cent),” it said, adding that prices dropped in Melbourne and Perth.

“Housing credit growth remains historically subdued and continues to be tilted towards investors.”