SYDNEY - Business conditions in Australia weakened last quarter and product prices fell, a private survey showed on Thursday, an outcome that could contribute to a soft inflation reading when official data is released next week.
The quarterly survey of over 900 firms by National Australia Bank Ltd also found confidence remained below its long-run average as companies fretted about falling commodity prices, a weaker outlook for the Chinese economy and the prospect of the US Federal Reserve scaling back stimulus.
The survey's main measure of business confidence fell to -1 from 2 in the first quarter, while the index of business conditions slipped to -4 points from -3 over the quarter, staying close to four-year lows.
"Business conditions were especially weak in mining, manufacturing and retail, suggesting lower borrowing rates and a falling AUD have done little to support activity in these industries," NAB chief economist Alan Oster said.
Product prices fell for the first time in the history of the survey to record an annualised deflation of 0.2 per cent, the report showed.
"Price inflation was less subdued in the retail sector, recording no growth in Q2, but this outcome still points to a very soft June quarter core inflation outcome," Oster said.
The closely watched consumer inflation data is due next Wednesday and a soft reading could bolster expectations of a cut to interest rates in August.