Profit slump but Government still upbeat

From

NAB business survey; Mid Year Economic and Fiscal Outlook (MYEFO)

  • NAB business confidence index eased from +10.1 to +8.1 in October. The business conditions index fell from +6.7 in September to +1.6 in October – a 15 month low.
  • CommSec has been highlighting for some time that the economy was far softer than the Reserve Bank appeared to be suggesting. And that weakness was clearly evident in the business survey. Profits, orders and trading conditions are slumping with retailing and construction particularly hard hit.
  • The Federal Government forecasts are clearly more optimistic about the longer term outlook for the economy. The budget deficit is expected to rise modestly over the coming year but be back in surplus by
    2012/13. The economy is tipped to grow by an upwardly revised 3.25 per cent this year, inflation is to hold at 2.75 per cent and unemployment is expected to fall to 4.75 per cent by June 2011.

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