Business confidence at seven year low

Posted by Daniel Palmer on 30th April 2008

Business confidence has fallen to its lowest level since March 2001 according to the quarterly report by the National Australia Bank (NAB). The NAB survey for the March quarter showed a drop of ten points in confidence to a figure of minus four. NAB surveyed 1700 firms throughout February and March to determine the results.

Interest rates and inflation have hit the disposable incomes of consumers with interest rates rising twice in the quarter and inflation increasing to decade highs at 4.2%. With food, fuel and finance considerably more expensive for consumers their demand for products has begun to fall, impacting on business confidence. Also contributing to the decline is the impact of higher interest rates on the financial performance of business and increased costs of production and/or supplies.

The fall in business confidence coincides with a recent slump in consumer confidence and retailers will be hoping that the tax cuts planned by the Federal Government in next month’s budget will stimulate demand.