Australian business conditions worsen

Tuesday 10th March 2009

Australian business conditions worsened last month, according to National Australia Bank's monthly survey, suggesting the economy has already slid into recession.

The bank's index of business conditions fell to -20 in February, the lowest level since June 1992, from a reading of -11 in January. That marks the eighth straight negative number in the monthly series and helped stoked expectations the central bank will cut interest rates again.

Figures last week showed Australia's economy unexpectedly contracted 0.5% in the fourth quarter and National Australia predicts the economy will contract 1% through 2009. The Reserve Bank of Australia left its benchmark interest rate unchanged at 3% last week.

"We see no fast recovery in Australian activity," said Alan Oster, the bank's chief economist. "It seems likely that Australia effectively entered recession in late 2008," he said.

The prospects for the job market also deteriorated, with the employment sub-index weakening to -27 from -17 in January.

Helping confirm the plight of the jobs market, Australian job advertisements slumped by a record amount last month.

Jobs posted in newspapers and on the internet fell 10.4% in February from January and were about 40% down on the same month of 2008, according to Australia & New Zealand Banking Group's monthly survey, released today.

Australia's 4.8% unemployment rate is forecast to exceed 7% next year.

By Jonathan Underhill

Comments from our readers

No comments yet