Property Development

Rate Cuts Likely as Business Confidence Takes a Hit

Written by The ReReport
As seen in the Source link, written by on 2019-03-12 16:14:09

Just about every indicator in NAB’s monthly business confidence survey softened in February, with the loss of momentum experienced in the latter half of 2018 continuing into the first quarter of this year.

Business conditions and confidence declined in February to below-average levels, driven by falls in profitability and trading sub-indexes, while retail remains the weakest industry by some margin.

The survey, which was based on a larger sample size in February, suggests that conditions have “materially deteriorated further to below average levels in 2019”.

“Forward looking indicators point to an ongoing weakness in business conditions,” NAB chief economist Alan Oster said.

“Confidence remains below average; forward orders are negative and capacity utilisation is trending lower. This may have important implications for both future investment and employment decisions of business,” Oster said.

Capacity utilisation is one of the key indicators monitored closely by the Reserve Bank.

NAB has now joined the chorus of experts calling for cash rate cuts, which are looking more and more likely as income and spending growth weakens.

NAB chief economist Alan Oster said that the RBA will likely make two rate cuts in the 2019, taking the interest rate to just 1 per cent by November.

Related: Interest Rates Dictate House Pricing: RBA