Australian business confidence fell to the lowest in almost a year amid higher interest rates and concern about the impact of global financial market turmoil on company earnings.
The confidence index dropped 3 points to 6 last month from October, according to a National Australia Bank Ltd survey of about 500 companies released in Melbourne yesterday. A reading above zero shows those expecting business to improve outnumber those predicting a deterioration.
Sentiment slipped after Australia's central bank raised its benchmark interest rate by a quarter point to 6.75 percent last month following a similar move in August. More companies expect exports sales and profits will fall as they monitor how much the US housing recession damps Australia's economy, now in its 16th year of expansion.
"The recent tightening in domestic financial conditions, monetary policy, as well as global financial turbulence appear to have to have taken their toll," Jeff Oughton, an economist at National Australia Bank, said in a statement. "Overall, however, the survey continues to point to relatively robust ongoing business conditions."
The bank's so-called business conditions gauge fell 5 points to 15, after climbing to a record in October. A reading above zero indicates more companies say earnings, sales and hiring were good last month than those reporting they were poor.
Australian Reserve Bank governor Glenn Stevens may raise borrowing costs again by March, after leaving the benchmark rate unchanged at an 11-year high last week, 19 of 24 economists surveyed last week by Bloomberg News said.
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