Australian business confidence down in November

Sydney

A MEASURE of Australian business conditions fell back sharply in November while confidence continued to decline, a subdued survey revealed that will only add to speculation of further cuts in interest rates. National Australia Bank's survey of more than 400 firms showed its index of business conditions retreated to +5 in November to be in line with its long run average. The index had jumped by the most on record in October to reach +13, its highest since early 2008.

The survey's measure of business confidence shed four points to stand at +1, with the biggest drops in the finance, property and recreation sectors. The weakness led NAB to join the growing club of banks that believe the Reserve Bank of Australia (RBA) will have to cut its 2.5 per cent cash rate. "Softer commodities and labour market outlook mean we have changed our rate call to two cuts of 25 basis points in March and August 2015, then on hold until late 2016," said Alan Oster, NAB chief economist.