Australian Business Conditions

Here is an update on the business and economic environment in Australia.

Australian business conditions plummeted in January to their lowest levels in a year, in another sign that the domestic economy is losing steam.

National Australia Bank, in its recent business survey, said its business conditions index slumped 15 points to 3 points last month, building on December's decline from record levels and returning to where it was in early 2003. The survey findings, combined with recent weaker-than-expected readings on housing finance, the labour market and retail trade, look likely to fan speculation that the Reserve Bank will leave interest rates on hold again next month.

NAB's measures of profitability, trading and employment all fell in January, although forward orders, investment and exports were stable. On a sectoral level, the slowdown was broadly based, with the largest falls in domestic sectors.

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