Business confidence hits two-year low

The decline was driven by large mining firms, with overall confidence weakest in mining and construction by some margin, NAB Group chief economist Alan Oster said.

The bank also found business conditions moderated in the fourth quarter, with the index falling three points to +8.

“Weaker business conditions reflected a drop in profitability and slightly weaker trading conditions, which offset stronger, albeit negative, employment conditions,” Mr Oster said.

NAB highlighted that these results mirror the results from its broader business survey which shows business conditions continue to portray a “patchwork economy”.

“Large falls in the mining and transport sectors offset solid gains in recreation and retail, while big construction firms continued to report the weakest conditions overall, possibly reflecting the pullback in mining-related construction,” Mr Oster said.

NAB also pointed out the falling value of the dollar appears to be providing momentum for higher export sales and export orders.

“After falling since mid-2014, export sales for ASX300 firms increased in Q4, in line with the large depreciation in the AUD that took place during the survey period in December," NAB said in a statement.

“The lower AUD has also provided momentum for export orders among larger firms. This is in contrast to the broader economy where export orders have fallen."