(RTTNews) - Tuesday, the results of the investor confidence survey by the Australian Chamber of Commerce and Industry revealed that business conditions continued to worsen over the December quarter of 2004, with expectations for the first quarter of 2009 being at record lows.

The index measuring business’ own conditions and sales moved to their lowest levels since the survey began in 1998, while the index measuring profitability declined to its lowest level in seven years.

The index for the own business conditions during the current period declined to 53.5 in the December quarter from 57.3 in the September quarter. The index measuring expected own business conditions moved down to 50.2 from 55.3 in the previous quarter.

The index of own current sales in the current period declined to 51.4 from 54.9. The index of expected own sales fell to 48.3 from 54.4, indicating the index’s first negative result in the survey’s 11-year history. Moreover, the index value indicated that businesses expect sales to continue to decline in the first quarter of 2009.

The index of own profitability for the current period slipped to 48.2 from 49.3, falling to its lowest level in seven years and remaining only marginally above the all-time low recorded during the first half of 2001. The gauge measuring the expected profitability fell below the 50 mark for the first time since survey began in 1998. The index slipped to 43.5 from 49.9, indicating that business expect profitability to deteriorate considerably in the first quarter of the new year.

The index of expected level of activity dipped to 46.4 from 51.4, a survey-low, signifying that business is pessimistic of a quick turnaround in activity during the first half of the new year.

The index of expected level of investment fell further into negative territory, slipping to 36.4 in the December quarter from 40.3 in the previous quarter. The index value reveal that businesses are anticipating investment growth to be much lower than the current rates of growth.

The index measuring the expected number of full-time employees declined further to 45.6 from 47.9 in the September quarter. The report said the index was now on par with the record low achieved in the first half of 2001, and suggests further weakening in full-time employment over the next six months. This is also consistent with the national unemployment expectations, which rose to its highest levels since 1998.

Among the other indicators within the business category, the index of expected capacity in relation to demand, increased to 58.7 from 56.8, reaching its highest level in more than seven years. The index measuring the actual sales compared with the level expected six months ago stood at 42.1 in the December quarter, its lowest level since the survey began. The index measuring the actual profits compared with the level expected six months ago declined to 39.2 in the fourth quarter of 2008.

Among the national economy indicators, the expectations for national economic conditions and the index of expected GDP growth touched survey-lows in the December quarter. While the index for national economic conditions declined to 34 from 35.8 in the third quarter, the index of expected GDP growth plunged to 29.1 in the December quarter. The report said that the dip in the two indices may be due to weakening domestic demand, the continuing financial market uncertainties, a rapidly deteriorating global economic outlook.

The index of the national expected business investments fell to its lowest level in over a decade, while the national climate for investment index along with its future expectations slipped to historic lows. The chamber said the negative outlook and reduced growth expectations appeared to have a large dampening effect on the firm specific investment intentions.

There was a significant fall in the index of expected interest rates. This was reflected by the aggressive rate cuts by the Reserve Bank of Australia over the December quarter, and business have already factored in expectations of additional future rate cuts. The index fell to a survey low of 25.2 in the fourth quarter from 42.9 in the third quarter. Meanwhile, the future expectations of prices and wage growth indicate that inflationary pressure will recede in 2009.

Among the indexes on constraints of investments, the index of business taxes and charges became the most critical barrier for businesses, displacing the index of availability of suitably qualified employees for the first time since late 2006. The index of insufficient demand moved to the fifth position from the ninth position as a constraint on investment in this quarter.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2009 RealTimeTraders.com, Inc. All Rights Reserved

Posted in Categories: Australia, Economy, Releases.

Subscribe by RSS Subscribe by Email