A key measure of Australian business conditions held broadly steady in September in the face of global financial market turmoil, helped mainly by the booming mining sector, a survey showed on Tuesday.
The National Australia Bank's (NAB) index of overall business conditions rose 2 points in September to a reading of -1. The survey's measure of business confidence, however, slipped 1 point, to leave it at a low -8.
The survey was taken in late September and early October in the midst of the uncertainty surrounding the passage of a $US700 billion ($1 trillion) financial bail-out package by the US Congress.
The bail-out plan, aimed at rescuing the battered US financial sector, was followed by coordinated rate cuts by major central banks, including the Reserve Bank of Australia as frozen credit markets threatened economic activity.
"In those circumstances it is perhaps remarkable that business confidence, if not conditions, did not seriously deteriorate in this survey,'' said Alan Oster group chief economist at NAB.
The survey found business conditions and business confidence were broadly unchanged in trend terms.
"That is a very different response relative to both equity markets and measures of consumer sentiment,'' Mr Oster said.
The survey found business conditions in the mining industry had improved in September, but confidence fell sharply due to sliding commodity prices.
Wage growth slows
The survey also found wages rose by 1% in September, on a three-month seasonally adjusted basis, which was down from 1.3% the previous month.
As a result, the annual rate of wages growth eased 0.1 percentage points to 5.3%.
Although only marginal, Mr Oster said this was the first time in 2008 the annual rate had fallen.
"A sharp slowing in demand, capacity utilisation, and profits also means that the scope for more aggressive wage outcomes will dissipate - and indeed that wage outcomes will slow from here,'' Mr Oster said.
Mr Oster said apart from the mining, construction and transport industries, there was a "general trend to flat or falling wage inflation''.
The monthly survey also includes NAB's latest forecasts for global growth and monetary policy.
NAB expects Australian gross domestic product (GDP) to remain unchanged at 2.5% in 2008, but to slow to 1.25% in 2009, compared with its previous forecast of 2.25%.
The bank expects core inflation to print at 4.5% in the September quarter and "around 4%'' by the end of 2008.
In terms of monetary policy, NAB forecast a 50 basis point cut at the RBA's November meeting, with the cash rate falling to 5% by March next year and 4.5% by July 2009.
The cash rate is currently at 6%.
There were also large downward revisions in the near-term outlook for the US and UK.
"These revisions are driven by the lagged impact of lower equity markets and continued disruption of global credit markets,'' the report said.
AAP, Reuters
