Business confidence is sliding, discouraged by persistently sluggish business conditions.
Confidence fell from seven points in February to four in March, according to the National Australia Bank monthly business survey.
Business conditions remained subdued but lifted slightly to one point in March.
Optimism was now at its lowest level since its post-federal election bounce last year and mining was the least confident industry, the report said.
“Rather than conditions rising to confirm the improvement in confidence, it seems that confidence is beginning to succumb to the continuing softness in conditions,” NAB economists said.
“The stubbornly high Australian dollar, uncertainty over the global economy and the potential for significant belt tightening in the upcoming budget, could all have contributed as well.”
Most industries did see improved conditions in March, except the transport and utilities and wholesale industries, the report said.
The wholesale industry, which NAB considers a bellwether industry, deteriorated heavily and was by far the weakest, while recreation and personal services saw the best conditions.
Although there had been pockets of improvement in the economy, a more broad based pick up was needed to sustain current confidence levels, NAB economists said.
“Current conditions are consistent with our view for a deteriorating labour market and sub-trend growth,” they said.
NAB economists said they still expected a rate cut later this year and unemployment to peak at 6.5 per cent.
They said dwelling investment and exports were likely to strengthen but expect a tight budget to add to mining headwinds.