SYDNEY, July 9 (Reuters) - A closely-watched measure of Australian business confidence retreated in June even as interest rates hit record lows, though Tuesday’s survey did show sales and employment managed to bounce a little.
National Australia Bank’s index of business conditions rose 2 points to +3, reversing a decline in May. In contrast, the survey’s measure of business confidence retraced its gains and fell 5 points to +2 in June.
“Overall, the survey results for June continue to suggest that the business sector has lost significant momentum over the past year or so,” said NAB Group Chief Economist Alan Oster.
“The recent run of results also suggest that the economy is unlikely to record a significant pickup in growth in Q2,” he added.
The economy expanded at its slowest pace in a decade in the first quarter of the year as consumers kept a tight rein on spending amid sluggish wages and falling home prices.
The Reserve Bank of Australia (RBA) has responded by cutting interest rates by a quarter point in both June and July, taking them to a record low of 1%.
NAB’s survey showed only a limited impact on activity in June. The measure of trading, or sales, edged up 3 points to +6, but profitability stayed soft at -2. Forward orders were also weak at -4.
One bright spot was a 3-point bounce in the survey’s employment index to +5, which hinted at some resilience in labour demand after the official jobless rate unexpectedly rose to 5.2%.
The RBA cited the need to push unemployment down to around 4.5% when it cut rates. Survey measures of inflationary pressure remained weak in June, with retail prices falling amid intense competition. (Reporting by Wayne Cole; editing by Darren Schuettler)