COVID-19 crunches corporate confidence in July

Victoria’s COVID-19 crisis has smashed corporate hopes for a smooth economic recovery, according to NAB’s latest survey.

Victoria’s second wave of infections has brought the rebound in corporate confidence to a shuddering stop. (Photo AAP/Megan Slade)

Business confidence suffered a dramatic reversal in July, as Victoria’s second wave of coronavirus infections smashed hopes for a rapid exit from the COVID-19 recession.

NAB’s survey showed confidence slumped 14 points to -14pts, ending two months of sharply climbing optimism following April’s dramatic collapse in the wake of the initial national shutdowns.

Confidence saw a “significant deterioration” across all industries and in each state, except South Australia and Western Australia, the report said.

But business conditions continued to climb in July, lifting eight points to zero, the survey showed.

Firms in NSW and Victoria, however, reported the weakest improvement in operating conditions.

The drop in confidence was also greatest in these east coast sta

tes, with Queensland showing a more modest decline.

The survey was conducted prior to the escalation to stage four restrictions in Melbourne and stage three restrictions in the rest of Victoria earlier this month.

NAB chief economist Alan Oster said the rebound in conditions was “encouraging”, but he warned that the fall in confidence even prior to the latest, stricter shutdowns “demonstrates that businesses will remain very cautious given the great uncertainty around the virus at the moment”.

“It also highlights that the business sector will require ongoing support through the recovery phase until the economy can get back on its feet” Mr Oster said.