MELBOURNE - Australian business confidence dropped to a three-month low in July, reinforcing expectations the central bank will not raise interest rates again this year.
The National Australia Bank's business sentiment index fell one point last month to a reading of four. Yesterday, the Reserve Bank of Australia said growth
was slowing and inflation pressures were easing, signalling the benchmark interest rate was likely to stay unchanged at 5.5 per cent.
The NAB found companies reported their weakest sales in 3 1/2 years in July.
"The survey reinforces our view of further weakness in domestic demand in the year ahead," Alan Oster, NAB chief economist, said.
"The Reserve Bank is on hold awaiting more data on the extent of this slowing."
The Australian Bureau of Statistics said the number of home-loan approvals granted to owner-occupiers in June fell 0.9 per cent, the third straight monthly decline.
The business conditions index, which measures sales, profits and hiring for companies in July, fell to seven from a reading of 11.
"There has been correction in consumer spending and the housing market, but there hasn't been a crash," Paul Lahiff, chief executive at Mortgage Choice, said. "There is no compelling case to move on interest rates anytime this year."
The index measuring companies' sales fell eight points, seasonally adjusted, to a reading of 10 in July, the lowest since January 2002.
Australia's economy grew a less-than-expected 0.7 per cent in the first quarter.
- BLOOMBERG
