Australian business conditions stumbled to their lowest level in more than three years in October, a business survey released on Tuesday by National Australia Bank showed.
The NAB monthly survey found that business conditions in Australia deteriorated further in October, down two points to minus five index points, with the pace of economic activity remaining consistent with below trend growth.
NAB said it was the weakest outcome recorded since May 2009. "The subdued outcome largely reflected a significant weakening of conditions in wholesale, manufacturing and construction, which all reported worryingly weak activity levels in the month," NAB said in a statement.
The survey found that the business confidence also fell in October, down one point to minus one point, partly unwinding a modest improvement in September. "It is likely that persistently weak confidence is having a material impact on demand conditions in the economy at present," the bank said.
"Consistent with the subdued level of business conditions in October, forward indicators of demand (especially forward orders) and employment remained well below average levels, pointing to little improvement in near-term activity."
Forward orders rose marginally, to minus five in October from minus seven the previous month.
NAB said part of the drop in business confidence was due to global concerns, including a belief that stimulus announcements by European Central Bank (ECB), U.S. Fed and Bank of Japan are not a short term fix to the deeper systemic problems harbored by these indebted sovereigns. "It appears that the RBA's (Reserve Bank of Australia) decision to lower the cash rate by 25 basis points to 3.25 percent at its October meeting failed to improve sentiment, with firms instead likely to be focusing on the reasons for the rate change -- a softening global economy, fiscal tightening, a soft labor market and high AUD," it said.