Business confidence slumped to record lows in January as the global economic slowdown tightened its grip on the local economy, a survey says.
The National Australia Bank (NAB) monthly business survey's measure of business confidence fell 12 index points in January, to -32 points.
The January reading erased a 10-point lift recorded in December and pushed the index to its worst result in the 20-year history of the survey.
A level below zero indicates that there were more pessimists than optimists.
The survey's measure of forward orders, trading conditions, profitability, export sales and employment all remained in negative territory.
NAB chief economist Alan Oster said the federal government's first fiscal stimulus package had provided only temporary relief.
"The situation domestically continues to fundamentally deteriorate," Oster said in the report.
"While much of the downturn to date has driven out of the domestic economy, the survey is increasingly showing signs of the impact of global forces."
One-off payments to pensioners, low-to-middle-income families and carers, which were part of the $10.4 billion fiscal stimulus package announced in October, started to arrive in December.
The measure of actual business conditions also slipped, dropping five index points to minus-11 points, and Oster expects continued deterioration in the months ahead. He said the survey's results appeared consistent with annual growth in non-farm gross domestic product below one per cent during 2008, with "little, if any, real growth" during the past six months.
Wages growth slowed in January to an annual pace of four per cent, well below the 5.4 per cent achieved in August last year and the weakest result since 2004.
"The survey is strongly indicative of employers continuing to shed labour - and at more rapid rates than that so far evident in the statistician's employment estimates," Oster said.
Demand for credit continued to weaken in January with 42 per cent of firms saying they required no borrowing in the month.
This was up from 39 per cent in December and 30 per cent in November.
The survey of about 400 firms across the non-farm business sector was conducted before the second fiscal stimulus package, worth $42 billion was unveiled.
It was also taken prior to the Reserve Bank of Australia's (RBA) latest 100 basis point cut the cash rate, which now sits at a 45-year low of 3.25 per cent.
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