Fed: NAB survey shows economy slowing, confidence down

AAP General News (Australia)
04-11-2000
Fed: NAB survey shows economy slowing, confidence down

CANBERRA, April 11 AAP - Higher interest rates have begun to bite, with the economy
slowing markedly and business confidence diving in the March quarter, a new survey has
found.

The National Australia Bank's quarterly business survey was taken just after the 0.5
per cent rate rise in February.

"Business conditions deteriorated significantly across most states and all sizes of
firms," the survey found.

"Business expectations of higher interest rates remained widespread.

"The vast majority of respondents (91 per cent) expect interest rates to rise in the
next 12 months."

The biggest falls were in trading and profitability, but employment remained strong,
with the NAB saying there was still a good chance the jobless rate would reach six and
a half per cent.

Exports also rose for the third consecutive quarter with firms predicting a further
strong pick-up in coming months.

However on the downside, wages and prices have now bottomed with the NAB suggesting
inflation could top one per cent for the March quarter.

Price increases exceeded expectation in the quarter, although business is revising
down the price rises it expects from the GST.

It is now tipping the tax will add 2.5 per cent to prices - slightly lower than the
official forecast of 2.75 per cent and down from the 3.25 per cent business predicted
in December.

Provided the GST does not prompt higher wages, the NAB is forecasting interest rates
will rise a further 0.5 per cent, beginning with another 0.25 per cent rise next month.

AAP ss/mfh/sk/bwl

KEYWORD: ECONOMY SURVEY

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