A surprise drop in new orders in the manufacturing, retail and construction sectors has dragged Australia’s business confidence to its lowest level in over a year.
National Australia Bank’s business confidence index, a widely watched gauge on the corporate sector’s sentiment, dropped to 2 points in July from 4 in June – the lowest level since June 2009.
Forward orders dropped 14 index points in July to -8, the lowest level since May 2009. Softer orders were reported in the areas of manufacturing, retail and construction sectors all but erasing companies’ relief at the scrapping of former prime minister Kevin Rudd’s Resource Super Profits Tax.
“While the expected boost to mining, post the mining tax agreement, eventuated, it was more than offset by declining confidence in manufacturing, retail and construction,” NAB chief economist Alan Oster said.
“The fall in new orders is probably the most unsettling feature of the July Survey results.”
The dollar dropped on the release of the data, falling to 91.28 US cents from about 91.4 US cents.
Despite Australia’s strong labour market and continued strength in iron ore and coal exports to China, the domestic economy has shown signs of flagging in recent weeks. In June