NAB: ‘Business Confidence Back In Negative Territory’
NAB’s Business Confidence Index contracted by 14 points in July, falling back into negative territory at -14.
Looking ahead, NAB expects business confidence to deteriorate further, given that the survey was conducted from 22nd to 31st July, before Stage 4 COVID-19 restrictions in Melbourne were implemented.
These restrictions included staffing reductions at food processing and logistics centres, which would have important flow-on effects for other businesses.
Business conditions, however, returned to neutral, at 0 index points, recovering from -21 points in May and -8 points in June.
“Conditions have now recovered to be broadly around their pre-COVID level with improvements across the country. However, with confidence still fragile there is some risk that conditions lose some of their recent gains in coming months,” said Alan Oster, Chief Economist at NAB.
“In combination with fragile confidence, these factors suggest recent gains may be reversed – in addition to the fact that stage four lockdowns will further impact confidence and conditions in Victoria.”
Oster also stated that the index findings highlight that the business sector will need ongoing support throughout the recovery phase until the economy is back on its feet.
The Roy Morgan Business Confidence index plunged 11.3% in July.
“The second wave of COVID-19 which began in Victoria is having an extremely negative impact on Business Confidence not only in Victoria, but around Australia. The index is down 12.5% to 73.9 in Victoria but has also plunged 32.1% to only 60.0 in SA, by 13.3% to 83.0 in Queensland and by 18.2% to 90.4 in WA,” said Michele Levine, CEO of Roy Morgan.
“For the Australian economy to enter a sustainable path of recovery it is vital the latest measures announced for Victoria, which by itself represents about 25% of the Australian economy, are successful in enabling the State to get on top of the second wave of COVID-19 as soon as possible.”