FXstreet.com (Barcelona) – Business conditions improved in June to -1 point from -4 points, reversing the major deterioration from May, when conditions fell to their weakest level in three years. Business confidence weakened to -3 from -2 in May, thus consolidating the sharp deterioration in May.
As read in the NAB official report: “The pick up in business conditions was fairly broad-based across industries, although the performance of some sectors remained worryingly weak – particularly manufacturing, construction, wholesale and retail. Conditions in finance/ property/ business were lacklustre compared to conditions over 2011, probably reflecting worsening external factors, which are filtering through to weaker domestic consumer and business onfidence. Despite a pick up in overall activity in the month, business conditions continued to trend lower and remained in negative territory, implying an overall contraction in activity.”
NAB elaborates on the worsening business confidence: “The survey was conducted after the successful election of the New Democracy party in Greece and before the EU leaders’ summit, which would later appear to be a breakthrough in efforts to preserve a stable euro, at least for the time being. In the lead up to both of these events, financial markets remained fairly skittish, which is likely to have contributed to the fall in confidence domestically. Meanwhile, the RBA’s most recent 25bp rate cut in June appears to have provided little additional support to confidence, with businesses perhaps instead focussing on the likely implications of the carbon tax and MRRT, effective 1 July 2012.”