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Australian business conditions still muted in Nov: survey

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A closely watched measure of Australian business conditions showed activity remained muted in November as weakness in manufacturing warred with strength in services, pointing to still subdued growth across the economy.

[SYDNEY] A closely watched measure of Australian business conditions showed activity remained muted in November as weakness in manufacturing warred with strength in services, pointing to still subdued growth across the economy.

National Australia Bank's index of business conditions held at +4 in November, from an upwardly revised +4 in October, still short of the long-run average of +6.

The survey's volatile measure of business confidence fell back to 0, reversing October's bounce to +2. The index of sales dipped a point to +6, while employment held at +4.

"Business conditions appear to have stabilised," said NAB group chief economist Alan Oster. "The survey has tracked broadly sideways in recent months after showing a significant deterioration between early-2018 and mid-2019."

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"The gap between the worst performing industries – the goods related industries – and services widened further," he added. "While we think conditions are stabilising, we don't see a significant recovery as being imminent."

There was some improvement in the hard-hit retail industry but activity was still depressed by the reluctance of consumers to spend.

Government data for the third quarter out last week showed household consumption grew at the slowest pace since the global financial crisis, limiting gross domestic product (GDP) to a modest increase of 0.4 per cent.

The Reserve Bank of Australia (RBA) and the government had been hoping consumers would spend the cash from tax relief and recent rate cuts, but most had chosen to save the money or pay down debt.

Australia's A$2.0 trillion (S$1.77 trillion) economy has dodged recession since the early 1990s but has now hit a soft patch as sluggish consumer spending and stagnant wage growth lead to a broad slowdown.

The RBA has cut interest rates three times to a record low 0.75 per cent and financial markets are wagering on at least one more 25-basis-point cut by the middle of next year. 

REUTERS