NAB: ‘Business Confidence Remains Weak But Is Rebounding’
The April NAB Business Survey noted a small rebound in business confidence late in the month, following the record lows of March. However, business confidence remains “well below the trough of the 1990s” recession.
Overall, the NAB survey noted that confidence rose 19 points to -46 index points over the whole month. This was led by improvements in retail, construction and mining.
Business conditions, meanwhile, continued to fall in April, declining by 12 points to -34 index points.
“While it is now likely that coronavirus containment measures could well ease earlier than expected, we expect this to be a gradual process. We also worry the hit to confidence will have some ongoing impacts to hiring and capex, which could see a drag on growth for some time,” said Alan Oster, NAB Group Chief Economist.
The NAB employment index was near its lowest level on record, at -35 index points.
Capacity utilisation fell significantly in the retail sector, which was down 10.9% in April.
The Roy Morgan Business Confidence plunged to a record low in April, falling by 19.1% to 76.1.
“The good news is that Business Confidence bottomed in the first half of the month and has since improved. For the first half of April Business Confidence averaged only 69.3, similar to its rating for late March of 71.4. Since this low-point the index has improved and averaged 82.0 during the second half of April as Australia ‘flattened the curve’ of new COVID-19 infections,” said Michele Levine, CEO of Roy Morgan.
Only 35.9% of Australian businesses said that the next year would be a ‘good time to invest in growing the business’.
While business confidence fell across most sectors, there were upticks in wholesale (5%) and manufacturing (4%).
“The announcement that Australia will undergo a three-stage re-opening process over the next two months to ‘reboot’ the economy has provided further hope that Australia may already be past the worst of COVID-19 and businesses can look forward to less restrictions on their activities in the coming weeks,” Levine said.