Australian business confidence fell to a 10-month low in June, as concerns about the ongoing eurozone debt crisis and slowdown in China overshadowed reduction in interest rates by the Reserve Bank of Australia (RBA), a private survey showed.
The confidence index slipped to minus 3 last month from minus 2 in May, a National Australia Bank Ltd. (NAB) survey released in Sydney today showed.
The business conditions gauge, a measure of hiring, sales and profits, improved to minus 1 from minus 4.
While business conditions improved, driven by a pickup in trading conditions and profitability, the rise was not enough to reverse the deterioration in the previous month, NAB said.
The RBA slashed interest rates by 50 basis points in May and by another 25 bps in June, moving to bolster the economy in the face of a worsening global backdrop.
While official data has showed the job market has been solid, NAB reported some weakness in June, while the gap between booming mining states like Western Australia and states like Victoria which are more reliant on manufacturing is becoming more pronounced.
Despite the lure of lower interest rates, demand for credit weakened sharply in June, with the proportion of respondents reporting a need for credit falling to 37% in June from 53% in May, NAB said.