SYDNEY (Reuters) - A closely-watched measure of Australian business conditions showed activity weakened into the end of 2019, as confidence slipped to its lowest since mid-2013 even before the full impact of raging bushfires made itself felt.
National Australia Bank's (AX:NAB) index of business conditions dipped a point to +3 in December, again short of the long-run average of +6.
The survey's volatile measure of business confidence fell 2 points to -2, with sales and profitability both deteriorating. The one bright spot was the index of employment, which held at +4 in December, mirroring official data on jobs that have topped expectations in the past couple of months.
"Conditions continue to imply a stalling in the private sector and we think that the survey suggests that there was another weak outcome in the December quarter," said NAB Group Chief Economist Alan Oster.
"For now, the survey has not showed clear evidence of a bushfire impact, but the more significant impact is likely to have occurred in January."
The fires grew steadily through the month, hurting tourism and consumer sentiment at the peak of the holiday period.
"Conditions appear to have bottomed, but our forward-looking indicators suggest they are likely to remain weak," Oster said. "We think that more policy stimulus will be needed to boost the economy over 2020."
The Reserve Bank of Australia (RBA) cut interest rates three times last year to a record low 0.75%, boosting home prices but having only limited success in spurring spending.
Financial markets are wagering on at least one more quarter-point cut by the middle of this year, though most doubt the central bank will move at its first meeting of the year on Feb. 4.
NAB's survey showed mixed conditions across industries, with large gains for wholesale and mining offset by falls in finance and business & property services.
Confidence declined in retail and construction, while the service industries were more buoyant.
There was little sign of inflationary pressure, with retail prices rising a modest 0.5% in the December quarter.