It’s not just the Reserve Bank that’s sitting on its hands.
The latest NAB business survey shows an extraordinary two-thirds of Australian businesses reported no need for finance in January, the highest proportion since the question was first asked in 2008.
The jump from 64 per cent of businesses requiring no credit to 67 per cent in the monthly survey rendered less relevant the subsidiary question of whether credit was easy to obtain. The survey found conditions broadly unchanged with an increases in the proportion of borrowers finding loans harder to obtain offset by an increase in the proportion finding them easier to obtain.
“There must be a lot of businesses sitting on their hands,” said CommSec chief economist Craig James. “Either firms aren’t keen to take on debt, internal sources of funding are healthy, or firms don’t want to take on new projects.”
“It is not as if confidence has totally dried up,” Mr James said. “It’s that businesses would prefer to hold fire at present, no doubt waiting to see how the European situation and domestic political situation play out. It appears the caution expressed by consumers is infectious, with businesses also seemingly blinded by the headlights of oncoming traffic.”
ANZ economist Dylan Eades said the survey showed the economy tracking sideways... with the Reserve Bank rate cuts and improvement in offshore markets apparently failing to significantly lift growth prospects.
The survey shows deteriorating conditions in the wholesale and construction industries, offset by improvements in mining. The net business conditions index inched up from zero to two percentage points above zero, slightly above its long term average.
Westpac senior economist Andrew Hanlan said a pronounced divide was developing with conditions “positive for Western Australia, very weak in Tasmania and close to zero for the other states.”
In today's Sydney Morning Herald
. Why the Reserve sat on its hands, why the banks might not
. The new Brisbane line divides the new haves from the new have-nots