(Bloomberg) --
Australian business confidence plummeted in March to the lowest level in the history of the survey as industry shutdowns designed to stem the spread of coronavirus sent the economy into a tailspin.
A gauge of sentiment slid to -66 from -2 in February, the biggest decline on record, National Australia Bank Ltd. said Tuesday. The conditions index -- which measures hiring, sales and profits -- slumped to -21 from 0.
“Recreation and personal services recorded the largest hit, unsurprising given the effective shut down of these sectors,” NAB said in a statement. “Forward orders collapsed to their lowest level on record, while capacity utilization also saw a sharp decline. Overall, the decline in forward orders and business conditions imply a large fall in GDP in the next 6 months.”
Australia’s Treasury forecasts unemployment will almost double this quarter to 10% and would’ve gone to 15% if not for fiscal stimulus measures. The government and Reserve Bank have assembled a fiscal-monetary shot worth A$320 billion ($205 billion), or about 16.4% of gross domestic product.
The survey saw a sharp decline in the employment index to -20 in March from 1, which NAB said is consistent with “a notable tick up” in unemployment. Economists forecast 30,000 roles were lost in March and the jobless rate rose to 5.4%, ahead of data Thursday.
“While it is unlikely that the unprecedented policy support targeted at the business sector will be unable to offset the near-term pain, it will be very important in supporting activity in the recovery phase,” said Alan Oster, NAB’s chief economist. “There is significant risk that a blow to confidence of this magnitude for an extended period could lead to ongoing fallout in terms of employment growth and capital expenditure by business.”
(Updates with employment index in fifth paragraph.)
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