Business and consumer confidence continues to slide, retail sales up 0.1%: Economy roundup

Sensis, Dun & Bradstreet and National Australia Bank have all published research this morning showing consumer confidence and business conditions remain at decade-long lows.

Three new pieces of economic research, three more bad news stories.

Sensis, Dun & Bradstreet and National Australia Bank have all published research this morning showing consumer confidence and business conditions remain at decade-long lows.

The consumer confidence report from Sensis revealed the rapidly rising cost of living has pushed consumer confidence down to 32%, by far the lowest point since the survey started in 2004.

Not surprisingly, confidence is lowest in New South Wales, where concerns about the state of the local economy helped push consumer confidence down to just 23%.

The turmoil in state politics in the last few days would have done nothing to improve the mood of NSW residents, and the latest comments from new Treasurer Eric Roozendaal – he says balancing the state budget would not be that difficult because he understands how the household budget works – do little to inspire confidence.

Dun & Bradstreet’s latest business expectations survey shows chief executives are bracing for an ugly end to the year, with steep declines in sales, profits, employment growth and capital investment expected.

Employment expectations have taken a particular hit, falling to their lowest level since 1991. Just 10% of executives expect to put on workers in the December quarter.

According to the D&B survey, interest rates and petrol prices continue to lead executive concerns, with 38% of respondents indicating that interest rates will be their primary issue in the quarter ahead and 37% say petrol prices will have the biggest impact on their business.

D&B chief executive Christine Christian says the recent interest rate cut will bring some relief to managers. “A slowing economy combined with high funding and goods costs have been eroding the profit margins of Australian businesses for many months now.

“The recent interest rate cut by the Reserve Bank supports expectations that conditions will slow further, at least in the short term. Despite this, the rate cut will be welcomed by executives due to its likely flow-on effects on spending and investment.”

NAB’s business survey for August found business conditions actually rose two points to an index of -3, although conditions are still 23 points lower than its recent peak in October 2007.

The NAB survey also points out that the outlook for companies is not improving, with the outlook for forward orders falling another two points to an overall index of -8, the lowest reading since 2001.

This morning also saw the release of retail sales figures for July, with sales inching up just 0.1% compared with market forecasts of a 0.5% rise.

The number of home loans taken out in July slipped 0.2%, in line with expectations.

The Australian sharemarket has come back to earth with a thud after surging nearly 4% on Monday, the biggest one-day percentage rise in about six months. The benchmark S&P/ASX200 index was down 86.9 points to 4890.6 by noon AEST.

The big corporate news was the ABC Learning announcement of a new chief financial officer, former CSR executive Peter Trimble. The company says it will report its long-delayed 2007-08 results by the end of the month.