Business confidence in Australia witnessed a sharp decline in November, revealed the National Australia Bank (NAB) in its latest monthly survey. The national index for business confidence dipped to a negative 3 in November, a significant drop from a positive 5 in October, reflecting substantial declines across various industries.
Furthermore, the index for business conditions fell to a positive 2 from a positive 7. Key metrics such as sales, profitability, and employment all saw reductions, highlighting a concerning trend as all subcomponents of business conditions are now at or below average. In terms of industry performance, November's conditions declined in nearly all sectors, with construction and mining being the exceptions.
The wholesale and manufacturing industries experienced the steepest declines, pointing towards weakened performance in these sectors. The NAB emphasized that the goods production and distribution sectors, especially manufacturing and retail, are the weakest regions in trend terms, while services sectors continue to show stronger performance.
Despite some stability, Australian business cost pressures remained mostly unchanged in November, with price and cost growth indicators remaining consistent across the survey. Looking ahead, Q4 is anticipated to be challenging for businesses, as the NAB survey suggests a persistent trend of soft growth.
This sentiment aligns with the recent estimates from the Reserve Bank of Australia, which forecasts a modest 0.8% growth in the nation's GDP for 2024..