By Oliver Gray
Investing.com - Business confidence took a hit during December as accelerating infection rates of the coronavirus Omicron variant threatens to stall the Australian economy's post-lockdown recovery.
The National Australia Bank's monthly business survey for December showed confidence tumbling by 24 points to an index of minus 12 from plus 12 the previous month, posting the first negative reading since August and the lowest figure since July 2020.
NAB chief economist Alan Oster noted that "The confidence index fell below the level recorded at the beginning of the Delta outbreak, showing just how concerned business are about the current virus wave."
Mr Oster said conditions have been surprisingly stable through the past few months with both lockdowns and reopening having only limited effects, despite big swings in confidence.
"That should provide some comfort that businesses are continuing to find ways to adapt through difficult circumstances," he said.
But overall the survey results are consistent with an economy that's starting to slow.
"That probably means conditions will fall in early 2022. However, we don't expect the Omicron variant to derail the recovery longer-term," he said.
Meanwhile, consumer confidence stabilised after a rocky start to 2022, buoyed by the latest labour force figures that showed the unemployment rate plunging to a 13-year low.
Inflation pressures and the drop in the unemployment rate have rekindled speculation the RBA may be forced to raise interest rates this year, and earlier than it had previously anticipated.