Business confidence and conditions slumped in the December quarter, even before the onset of the Queensland floods, a survey shows.
The National Australia Bank business survey for the final quarter of 2010 found business confidence fell four index points to five, while business conditions fell three points to two.
A reading above zero indicates optimists outweigh pessimists.
The quarterly survey was conducted between late November and early December – before the Queensland floods.
“The survey suggests that optimism about the outlook was on the wane even before the severe floods in December and January,” the survey said.
Business conditions softened again in the December quarter under the weight of sagging profitability, which fell five points to minus one.
Transport and utilities, agribusiness, business services and finance all reported sharp declines in conditions.
“This is consistent with ongoing weakness in domestic demand, reflected in soft forward orders and declining capacity utilisation.”
Conditions improved in property services, recreation and mining.
Meanwhile, the monthly survey showed that the floods badly damaged both confidence and conditions in December.
Conditions improved in December, but fell from six index points to minus six in January, during the worst of the floods.
New data in the survey suggested that business capital spending plans over the next 12 months remained unchanged in the December quarter.
Long-term employment expectations remained strong at 17 index points, while average hours were broadly unchanged.
More firms reported lack of demand as a constraint on profitability for the first time in more than a year, the survey said.