Business conditions improved slightly in August but the economic outlook of firms remains poor, the monthly National Australia Bank survey shows.
NAB’s survey found business conditions rose two index points to minus three points in August.
It was a rebound from the July fall in business conditions to the lowest level since October 2001, in the survey of more than 400 private sector firms.
The August reading is 23 points lower than its most recent peak in October 2007 (a reading of zero separates expansion from contraction).
Business conditions for the non-farm sector experienced a minor rebound last month after a sharp fall in July.
"The slight improvement in conditions was not broadly based… all sectors fell further other than mining, which was sharply up,” NAB chief economist Alan Oster said.
“Western Australia was the only state to improve and mining rebounded in the month.”
The report said the recent falls may be temporary due to the production disruptions relating to the availability of gas in WA.
However, business confidence lifted two index points to minus seven points in August.
The marginal rise in confidence was narrowly based, with all sectors falling except retail.
The drop in capacity utilisation over recent months and softened employment conditions would suggest that labour costs would not stand in the way of further easing by the RBA, the report said.
Running costs for business also kept rising and purchase costs increased by 6.1 per cent in the year to August. Capacity utilisation remained stable at about 81.9 per cent in August.
Forward orders fell by two index points to minus eight points, continuing their slide since late last year.
Forward orders, usually a major indicator of activity, were firmer in mining and infrastructure construction but weak in manufacturing, wholesaling and finance/business/property services.
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