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(Australian Associated Press)
Post-election tax rebates and a second cut to the cash rate failed to boost business confidence in July, a closely-watched survey of business shows.
The National Australia Bank’s index of business conditions, a monthly survey of about 400 companies, was broadly unchanged from June and remained significantly below average.
Business confidence rose by two points to +4 index points, while business conditions fell by two points to +2.
“Broadly the picture from the business survey is unchanged from last month – the key message being that the business sector has lost significant momentum since early 2018 and that forward looking indicators do not point to an improvement in the near term,” the NAB report said.
Weakness in the retail sector, already at recessionary levels, declined further in the month, with retail sales volumes at its lowest rate since the 1990s recession.
“A worrying result, given we expected some boost to the industry following the post-election tax cuts,” NAB said.
The weakness in the retail sector appears to be broad-based, and most pronounced in the car sector, followed by food and household goods.
Construction and wholesale industries also experienced sharp declines in the month, while mining, transport and utilities and finance did better.
Business conditions fell in all states except Western Australia, which saw a spike.
Overall it appears that the lift in business confidence following the federal election in May has faded.
“It appears that both the cut to interest rates and boosts to tax rebates is yet to feed into the business sector and that the weakness in Q2 has persisted into Q3,” the report said.