Australian business activity off record highs as lockdowns bite-survey

SYDNEY, (Reuters) – A measure of Australian business conditions fell from record highs in June as coronavirus lockdowns in New South Wales and Victoria curbed sales and undermined confidence, though activity was still solid in historical terms.

National Australia Bank’s (NAB.AX) index of business conditions dropped 12 points to +24 in June, after climbing 5 points in a very strong May survey.

The survey’s measure of confidence slipped 9 points to +11, though that was still above the long-term average.

“The decline in conditions was broad-based across states but led by a significant decline in Victoria coming off the back of the lockdown that started in late May but was eased, in a series of steps, over June,” said NAB chief economist Alan Oster.

However, as the lockdown in Victoria eased, another began in Greater Sydney which looks set to extend for several weeks.

“The hope is that, as like previous episodes of shutdowns, that businesses bounce back on reopening,” added Oster. “While, there is less fiscal support around, businesses conditions have been strong and hopefully the recovery continues.”

The survey measure for trading, or sales, fell 10 points to a still-high +35 in June, while profitability lost 13 points to +25 and employment 8 points to +17.

Capacity utilisation dipped back to 83.9%, while forward orders shed 9 points to +15.

Confidence fell in all industries except mining and manufacturing, with recreation & personal suffering a steep 27 point decline as businesses were shut.

The NAB survey was conducted from June 18-30, catching the start of the Sydney lockdown.