Australian September Business Confidence Holds Near 7-Year Low

By Jacob Greber and Gemma Daley

Oct. 14 (Bloomberg) -- Australian business confidence held close to the lowest level in seven years last month, adding to signs the economy is slowing.

The sentiment index fell 1 point in September to minus 8, according to a National Australia Bank Ltd. survey of more than 400 companies.

Concern that the deepening global financial crunch is hurting even ``creditworthy'' borrowers was a key reason central bank Governor Glenn Stevens cut Australia's benchmark lending rate this month by 1 percentage point to 6 percent, the biggest reduction since a recession in 1992. Companies such as Qantas Airways Ltd., the nation's biggest carrier, are already firing workers, pushing the unemployment rate higher.

``The recent tightening in domestic financial conditions, lower asset prices and rising oil and commodity prices as well as global financial turbulence have taken a heavy toll on confidence,'' said Alan Oster, chief economist at National Australia Bank in Melbourne.

``At the same time, actual business outcomes have turned poor,'' Oster said.


The sentiment index posted a ninth straight reading of less than zero, which indicates companies expecting their industry will deteriorate outnumber those seeing an improvement.

The survey's business conditions gauge, a measure of hiring sales and profits, rose in September to minus 1 from minus 3.

To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net