Business sentiment in Australia deteriorated significantly in November, with a broad-based decline in activity across key sectors, according to National Australia Bank's Monthly Business Survey.
The latest survey revealed a sharp drop in business confidence, which fell by eight points to -3 index points, reversing the gains recorded in October.
Confidence now sits well below the long-term average, weighed down by notable weakness in retail and wholesale sectors, where confidence indices remain at -10 and -4, respectively.
NAB Chief Economist Alan Oster noted, “Confidence fell sharply in November and is now back below average.
“While we were optimistic last month, it appears the trend of well below-average confidence remains intact.”
Business conditions also softened, falling by five points in November. Trading conditions saw the largest decline, dropping eight points, while profitability fell by six points and employment eased by one point.
“Conditions in the goods sector remain weak,” said Mr Oster. “Interestingly conditions in the services sectors – recreation & personal services and finance, business & property services continue to track at a higher rate.”
All subcomponents of business conditions now hover at or below average levels, with the manufacturing and retail sectors showing particular weakness. Conversely, the construction and mining industries recorded slight improvements, bucking the broader downward trend.
Regionally, conditions worsened in Western Australia, New South Wales, and Victoria, while Queensland saw a modest improvement. South Australia remained flat, with Queensland emerging as the strongest-performing state in trend terms and South Australia the weakest.
Forward orders continued to decline, falling to -5 index points, reflecting subdued demand in mining and retail.
Despite the downturn, capital expenditure rose slightly by one point to +10, and capacity utilisation held steady at an above-average 82.4%, suggesting businesses are yet to fully adjust to slower economic growth.
The figures underscore persistent challenges for the Australian economy, which continues to grapple with the impact of high borrowing costs on household consumption.
Market participants now turn focus toward the Reserve Bank of Australia's interest rate decision, where the central bank is widely expected to maintain its benchmark interest rate at 4.35%, as policymakers assess the ongoing economic slowdown and its implications for inflation.