The results are in from the National Australia Bank’s (NAB) March 2020 business survey, and as could be expected, the COVID-19 pandemic has created unprecedented challenges for Australia’s businesses.
The business conditions index hit -21, falling from 0 in February, while business confidence hit -66, marking the lowest point in the survey’s history. The latter metric fell from -2 in February.
NAB Group Chief Economist Alan Oster said, “Worryingly, but not surprisingly, business’s outlook is the weakest ever. Business has essentially told us that trading conditions, profitability and employment all went backwards in a big way in the month.”
The bank expects the Australian economy to suffer a recession over the next three quarters, with a sharp hike in unemployment levels.
Westpac has forecast that Australia’s unemployment rate will grow from 5.2% in the first quarter of 2020 to 8.1% in the second quarter and 8.8% in the third quarter. Westpac estimated that the government’s Jobkeepers payment package has prevented the unemployment rate from surging to 17%.
However, the Australian Treasury placed this figure higher, estimating unemployment would reach 10% by the end of Q2 2020.
Source: NAB
NAB also highlighted cashflow as a key consideration for keeping businesses afloat. “Without cashflow support, it is likely that many businesses will be severely impacted and unable to return to operations once the economy begins to recover,” Oster said. “This has been an important focus of policy makers.”
NAB’s Business Survey results are in line with other business sentiment gauges, such as the Roy Morgan Business Confidence index, which also hit a record low in March, falling by 9.1% to 95.1.
