Business confidence hit by Omicron impact | Liverpool City Champion

Business confidence has been hit hard by the emergence of the Omicron variant, which threatens to dampen Australia’s economic recovery from the lockdown.

The National Australia Bank’s Monthly Business Survey for December showed confidence falling 24 points to an index of minus 12 from plus 12 the previous month.

Business confidence – a guide to future hiring and investment – was down in every state.

“The confidence index has fallen below the level recorded at the start of the Delta outbreak, showing how concerned businesses are with the current wave of the virus,” said NAB Chief Economist Alan Oster. .

However, while trading conditions also fell three points, they remained just above the long-term average at eight index points.

Mr Oster said conditions have been surprisingly stable in recent months, with closures and reopenings having only limited effects, despite large swings in confidence.

“It should provide reassurance that businesses continue to find ways to adapt to difficult circumstances,” he said.

But overall, the survey results are consistent with an economy starting to slow.

“This likely means conditions will drop in early 2022. However, we don’t expect the Omicron variant to derail the longer-term recovery,” he said.

Meanwhile, consumer confidence stabilized after a rocky start to 2022, supported by the latest labor force figures which showed the unemployment rate plunged to its lowest level in 13 years.

However, concerns about the inflation outlook remain high.

The weekly ANZ-Roy Morgan Consumer Confidence Index – a gauge of future household spending – rose 2.2%, recovering in part from its 7.6% plunge the previous week, which was the result of January the weakest since 1992.

Australia’s ANZ economics chief David Plank said the recovery came the same week the unemployment rate fell to 4.2% and amid signs that COVID-19 cases appeared have reached a peak.

Confidence was driven by increases of 7.7% in Victoria, 8.8% in Western Australia and 3.7% in Queensland.

However, New South Wales and South Australia saw declines of 2.4% and 2.6% respectively.

The survey’s consumer inflation expectations rose 0.1 percentage point to a recent seven-year high of 5%.

It came ahead of the latest inflation figures which are expected to show prices remained at the top of the Reserve Bank’s 2-3% target, fueled by rising fuel and housing costs.

Last week, the national average petrol price rose 3.3 cents to a recent record high of 170.4 cents per litre, according to the Australian Institute of Petroleum.

Inflationary pressures and a falling unemployment rate have rekindled speculation that the RBA may be forced to raise interest rates this year, and sooner than it had previously expected.

Australian Associated Press

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