SYDNEY (Reuters) - A measure of Australian business conditions slid deeper into negative territory in April as sales, profit and employment suffered from coronavirus-induced lockdown, though confidence did bounce somewhat after a record slide in the prior month.
National Australia Bank’s (NAB.AX) index of business conditions sank to -34 last month, from an already dismal -22 in March. That was far below the long-run average of +6 and worse than during the global financial crisis.
The survey’s measure of business confidence did manage to pick up slightly to -46, from March’s -66, but again remains well below the long-run average.
“Confidence saw a rebound, but this provides little comfort given it remains around twice as weak as the 1990s recession,” said NAB Group Chief Economist Alan Oster. “Business conditions declined further in the month, with a broad-based deterioration across industries.”
Measures of sales and profits dropped sharply, while employment dived 15 points to -35.
“The decline in the employment index is consistent with a significant shedding of employees by respondents,” said Oster. “Overall the survey suggests that the unemployment rate will rise substantially in April.”
The official April jobs report is due on Thursday and expected to show a record dive of 575,000 jobs. Unemployment is seen jumping to 8.3% from 5.2% in March.
The pandemic has wreaked havoc on two of the country’s most lucrative sectors - tourism and education - with the Reserve Bank of Australia (RBA) warning economic output could contract by 10% over the first half of the year.
The central bank has reduced interest rates to an all-time low of 0.25% and launched a major campaign of bond-buying to pump liquidity into the financial system.
The Australian government has pledged over A$200 billion ($129.68 billion) in fiscal stimulus, including A$130 billion for an employee subsidy that could help limit job cuts in hard hit sectors.
Treasurer Josh Frydenberg is set to tell parliament later Tuesday that plans to remove most social distancing restrictions by July would boost the economy by A$9.4 billion every month.
“We see a recovery in growth late this year, but even though it could be a solid bounce the level of output is not expected to be recovered to pre-COVID levels until early 2022,” warned NAB’s Oster.
Reporting by Wayne Cole, Editing by Sherry Jacob-Phillips