Investment intentions and profit expectations of firms have fallen "to dismal levels", accord to ANZ in its latest Business Outlook survey.
The September ANZ Business Outlook Survey saw headline confidence fall
2 points, with a net 54 per cent of respondents reporting that they expect general
business conditions to deteriorate in the year ahead - the lowest since April 2008.
Firms' expectations for their own activity over the year ahead fell 1 point,
the fourth fall in a row, and the lowest read since April 2009.
Employment intentions saw a one-point gain but remain at a historically low level.
"The Reserve Bank will be disappointed that its unexpectedly large 50bp cut in the
Official Cash Rate last month does not appear to have had much impact on
business' sentiment or investment and employment intentions," ANZ chief economist Sharon Zollner wrote.
Fundamentally the economy was still in good shape, she said.
"Commodity prices are still decent; population growth is positive; monetary conditions have eased. But the prolonged lack of confidence is starting to feed its way through the
economy and is threatening the tight labour market."
One positive was that construction sector employment intentions had bounced
back, Zollner said.
Construction accounts for 9 per cent of employment.
"But, there is still no sector of the economy that reports on net that it is planning on hiring more staff – that hasn't happened since 2009," she said.
"And the services sector, which employs a hefty 74 per cent of people across the economy, is now also capitulating. This gradual but prolonged economic slowdown is at risk of ceasing to be about the data and starting to become about the people."
A net 40 per cent of firms said they expect it to be tougher to get credit, up one per cent.
Export intentions rose 3 points to a net 2 per cent of firms expecting exports to lift.
This was quite muted considering the size of the fall in the exchange rate, Zollner said.
Critics - including the Government- have accused business confidence surveys of being overly negative and politically biased.
Economists tend to look through the headline confidence figures at firms own intentions.
There were a number of strong correlations within the survey has Zollner argued.
These included employment intentions with employment, investment intentions with investment and own activity with GDP.