Mining, manufacturing and recreational and personal services are the sectors of the Australian economy doing it toughest at the moment, but retailers are a bit more confident as the first of the cheques from the latest stimulus package start flowing.
The latest monthly business survey from the NAB paints a picture of an economy slowing a bit more sharply than expected.
The NAB’s survey of business confidence and conditions for last month doesn’t make cheery reading and confirms the impression from recent surveys and last week’s 4th quarter economic growth figures that the economy is sliding faster than previously thought.
A recession looms (on the official two consecutive quarters of negative growth) with the current quarter seeing a slide into an official recession.
That’s despite a small improvement in business confidence, which came despite a ‘crunch’ in business conditions, which fell another 9 points in February to levels not seen since midway through 1992 at the depths of the last slump.
Employment and trading conditions fell with the outlook for jobs the worst since late 1991, pointing to further pressures on employment in coming months. This was reinforced by a sharp fall in the outlook for new orders.
The bank said that "Overall the survey suggests a further step down in demand in Q1 – that is, further negative growth".
Mining, manufacturing and recreational services were gloomiest of the industry sectors. But with the first payments from the second federal stimulus package going out tomorrow, retailers are a bit more confident, but still at last recession levels.
David Jones is trying to get in for its cut, announcing a free $20 gift voucher for every $200 worth of its gift vouchers bought from today until next Sunday. The retailer claims it’s offering Australians a chance "to get more value from their stimulus payment".
The NAB said business conditions fell 9 to an overall reading of -20 index points – a new recent low and a level not seen since June 1992:
"Trading conditions fell 11 to -15 points, and profits by 5 to -17 index points. In both cases these readings have returned to the lows prior to the Government’s first fiscal stimulus. Employment fell 10 to -27 points – the largest fall in the Monthly Survey’s history, to a level not seen since December 1991.
"Forward orders fell 7 to -27 points – clearly a new recent low and to a level last seen in June 1991. Stocks were further run down – falling 2 to -9 index points. Capacity utilisation fell 0.9 points to 79.4% – the first reading below 80% since April 2001.
"Exports up +7 points – but remain at historically very low levels (-26 index points). Capital expenditure remained broadly unchanged at -20 points – trending down."
The Bank said the level of confidence among businesses rose:
"Confidence, on the other hand, rose +10 to -22 points (albeit, to a level still no better than the bottom of the 1990/91 recession)."
The NAB said that the February Survey reveals a further step down in domestic demand and activity. Indeed, in a pattern that is likely to continue, the gap between business confidence and conditions is closing – with activity continuing to move down.
"While business confidence improved in February that is very much driven from improved expectations in the retail and wholesale sectors.
"In turn, those sectors are the ones most likely to benefit from the next round of Government cash handouts.
"It was also noticeable that improved expectations were not driven by better activity levels in February (especially retail which fell 12 points).
"Elsewhere, there were better confidence readings in transport – which presumably reflects lower oil prices – and finance property and business services (as global markets slightly improve).
"However there is little in the Survey to suggest that activity levels might be bottoming – with continuing falls in mining and manufacturing activity very prominent.
"Nor is there much solace to be found in the employment, forward order and capex data in the Survey. Further, as can be seen below, in trend terms business conditions continue to move significantly lower."
"Turning to business conditions the large gaps between Western Australia, Queensland and the rest continue to evaporate, with Western Australian activity continuing to slow.
" Somewhat surprisingly both activity and confidence have marginally improved (albeit at very low levels) in NSW recently and may in part be explained by the relatively larger bounce in retail sales reported in that state due to the Government’s spending.
"Most other states are reporting similar (depressed) outcomes."
