Australian business confidence slumps to record low

Tuesday 11th November 2008

Australian business confidence slumped to a record low in October, spurring concern the economy may slide into recession as global demand for the nation's raw materials drops.

National Australia Bank's sentiment index fell 21 points to minus 29, the lowest in the survey's 19-year history. A measure of forward orders fell to 17-year low of minus 20, according to a report from the bank.

Australia's central bank yesterday cut its forecast for economic growth this year to 1.5% from 2 percent, having slashed its benchmark interest rate to 5.25%, the lowest in more than three years. Rio Tinto, the world's second largest exporter of iron ore, yesterday said it will cut output in Australia by 10% on waning demand from Chinese steelmakers.

The benchmark S&P/ASX 200 Index fell 3.3% to 3972 in mid-afternoon trading and has tumbled about 38% this year. Amid signs of an accelerating slump, childcare centre chain ABC Learning was put in administration last week, while retailer Harvey Norman today said same-store sales fell 2.8% in the most recent four-week period.

By Jonathan Underhill

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