Australia’s business conditions and confidence declined sharply in July amid strict restrictions in many states to curb the spread of the virus, survey results from National Australia Bank showed on Tuesday.
The business conditions index fell to 11 in July from 25 in June. Conditions softened in all industries, with the exception of mining – where it remained elevated.
The deterioration in conditions has been less severe than 2020, but could worsen should lockdowns persist or become more widespread, NAB cautioned.
The forward-looking indicators also softened and, with forward orders now back in negative territory and capacity utilization now back around average, suggest little improvement in conditions in the near term, NAB said.
The business confidence index came in at -8 in July versus +11 in the previous month. Transport and utilities, manufacturing and finance, business and property reported very large declines in July.
“It is now widely expected that we will see a negative print for GDP in Q3,” Alan Oster, chief economist at NAB, said.
“However, we know that once restrictions are removed that the economy has tended to rebound relatively quickly. We will continue to track the survey very closely for an indication of just how quickly that happens – particularly forward orders and capacity utilisation as we assess how the disruption has fed into expansion plans as conditions bounce back,” Oster, added.