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Survey predicts economy slowing, jobless rate -

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BRENDAN TREMBATH: There are more signs today that the Australian economy is slowing under the
weight of higher interest rates and continuing global financial turmoil.

According to the National Australia Bank's monthly business survey, spiralling fuel prices are
dampening business expectations and weaker consumer spending is starting to put pressure on jobs
growth, after a long period of record low unemployment.

I'm joined in the studio now by our Business editor Peter Ryan.

So what is the survey telling us about the economic outlook?

PETER RYAN: Well, Brendan it is telling us that business confidence and conditions have actually
stabilised in May but the bad news is that they are staying in a trough after recent large falls.

And there's no sign of a recovery with the headline being that the days of record low unemployment
could be about to end as many employers reassess their need for more staff and grow their

Now this is a significant move, given that strong employment really has been underpinning the
economy and the spectacular growth of recent years so we are now seeing a slowdown in sales and
profits feeding right into the jobs market now and companies are battening down their budgets amid
higher interest rates and higher fuel prices.

And incidentally, we've also seen owner occupied housing finance down by three per cent in April.

But back on the NAB survey, the trend could be sustained as employers scale back and what we would
expect to see is the economy slowing further, the unemployment rate to rise and inflation pressures
start to ease.

And if those ingredients combine, the NAB's head of Australian economics, Jeff Oughton, believes
the Reserve Bank will consider cutting interest rates in 2009.

JEFF OUGHTON: There's still some nervousness around financial conditions with what is happening
with petrol prices and other rising purchase costs. We think that with a bit of luck here, the slow
down in domestic demand will stave the Reserve Bank's hand for the remainder of the year and as you
see that slower demand sustained and unemployment are rising a bit, inflation pressures will ease
and the Reserve Bank will cut cash rates significantly next year.

BRENDAN TREMBATH: The National Australia Bank's head of Australian economics, Jeff Oughton.

And Peter Ryan, another survey out today also shows the outlook for business is getting
increasingly grim?

PETER RYAN: Yes Brendan, this is the regular business survey from the credit reference group Dun
and Bradstreet and the big concerns continue to be higher petrol prices, tighter credit conditions
and increasingly weak consumer spending as families tighten their budgets.

In addition we are seeing twenty per cent of executives surveyed saying they expect to have fewer
staff in the three months to September than they did a year ago tying in with that sentiment from
the NAB survey.

Dun and Bradstreet's managing director Christine Christian says confidence is at its lowest level
since 1991 when - as Paul Keating put it - Australia went through the recession it had to have.

CHRISTINE CHRISTIAN: Continued pressures from inflation, the credit market, high fuel prices and
slowing consumer spending. All of the above have led to this very steep decline in business
expectations and in fact the business community is now anticipating a rapid slow down in activity
for the coming months.

BRENDAN TREMBATH: The managing director of Dun and Bradstreet Christine Christian.

Peter Ryan, two other closely watched surveys also predicting shifts in the employment landscape
after a boom era?

PETER RYAN: That is right Brendan, there are more signals that weaker economic growth is set to
push up unemployment.

The ANZ job ad series has fallen in May, registering an overall decline of 1.7 per cent in the
number of newspaper and internet job ads.

And just on their own, newspaper job ads have recorded their biggest monthly slide in almost eight
years, dropping 13.5 per cent.

We also have the Olivier survey which has tracked a slight shift in job ads this month.

But these are mainly tagged to the resources boom with much of the growth from engineering jobs in
Queensland and Western Australia.

But one sector has gone into negative territory with jobs in the banking and finance down three per
cent, not surprising given the global financial turmoil we have been seeing recently.

BRENDAN TREMBATH: Business editor, Peter Ryan thank you very much.