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Category: Economic Trends

Business confidence resilient despite market turmoil

Monday, 25 Jan 2016 08:41:33 | Thuy Ong

Australian businesses remain confident overall. (Priority Engineering Services)

Australian business confidence has remained resilient despite recent market turmoil, according to a widely-watched survey.

The NAB Monthly Business Survey showed a slight dip in business confidence, from +5 in November 2015 to +3 in December.

Business conditions remained elevated, even though though they eased slightly, falling to +7 points over the period from +10 points.

"While recent big declines in oil and equity markets highlight potential risks to the global outlook, relatively positive business conditions appear to have, so far, acted to reassure business sentiment," said NAB's chief economist Alan Oster.

The bank found that lower interest rates and the depreciating Australian dollar has helped buoy the services sector.

The retail and construction sectors, however, experienced a large contraction in business conditions.

"Falling mining investment is still having an effect on construction, but we are also likely witnessing some loss of momentum in these industries as residential property markets start to cool," explained Mr Oster.

The bank said business conditions suggested the non-mining recovery remained on track, and it expects the Reserve Bank of Australia is likely to remain on the sidelines for the foreseeable future.

However, the bank said the global outlook appears weaker, and it lowered their global forecasts for 2016 to 3 per cent.

It expects the Australian dollar to fall to 66 US cents by June 2016.

Global growth continues to disappoint and remains below average as a slowdown continues across many emerging market economies, the bank said, acknowledging its numbers remain well below the IMF's economic forecasts.

AustraliaPlus


 

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