Australian business confidence suffered a sharp fall in the third quarter, yet investment intentions remained strong, a survey on Thursday showed, offering hope that a tentative rebound in sentiment in September will persist.
National Australia Bank's (NAB) quarterly survey of more than 900 firms showed its measure of business confidence slumped to -4 in the September quarter from +5, reflecting acute global market volatility and fears about Europe's debt crisis.
The survey's measure of business conditions dropped to -3, from +2, with sales, profitability and employment all under pressure.
Despite the weak quarterly outcome, the monthly profile shows that conditions gained momentum in September after weakening in July and August," NAB chief economist Alan Oster said.
Indeed, the monthly survey released last week showed business confidence rebounded in September, with sales and employment staging a welcome pick up.
Adding to hope that the worst may be over, the quarter report's index of capital spending plans over the next 12 months slipped only modestly to +21 from +29, remaining at levels consistent with strong business investment growth of around 10 percent per year.
The survey showed hiring expectations for the next 12 months eased, but average hours worked increased, implying that employers may be working their existing labour force harder as they delay hiring until the economic outlook improved.