Dec. 13 (Bloomberg) -- Australian business confidence was unchanged in November as Europe’s deepening sovereign-debt crisis offset the Reserve Bank’s first interest-rate cut in 31 months, a private survey showed.
The confidence index was 2 last month, the same as in October, according to a National Australia Bank Ltd. survey of about 550 companies from Nov. 21-25 that was released in Sydney today. The business conditions gauge, a measure of hiring, sales and profits, rose to 1 from zero.
The nation’s central bank reduced the benchmark rate by a quarter percentage point on Nov. 1 and again on Dec. 6 as inflation pressures eased and risks to global growth increased. Australia is headed for its worst annual jobs growth in 15 years as consumers boosted savings amid concern about potential fallout from fiscal problems in the U.S. and Europe.
“At the time the monthly survey was taken, the RBA had lowered the cash rate by 25 basis points, but European debt woes continued during the month,” NAB Chief Economist Alan Oster said in a statement.
RBA Governor Glenn Stevens lowered the overnight cash rate target to 4.25 percent from 4.5 percent on Dec. 6, citing “considerable turbulence” in financial markets and an increased chance of a “further material slowing in global growth.”
Traders are betting Stevens will lower borrowing costs again at the central bank’s next meeting in February, interbank cash-rate futures show.
Driving Australia’s economy is demand from developing nations including China and India for iron ore, coal and natural gas. That has spurred the nation’s currency, which reached $1.1081 on July 27, the highest level since it was freely floated in 1983.
The world’s fifth most-traded currency has fallen 9.4 percent since its peak on concern Greece would default and trigger a repeat of the 2008 credit freeze that followed the collapse of Lehman Brothers Holdings Inc.
Payrolls in Australia gained 44,700 through the first 11 months of this year, on pace for the smallest growth since 1996 after a record 362,300 increase in 2010, government data showed last week. The report contrasted with figures showing the biggest six-month gain in economic growth since March 2007.
--Editors: Brendan Murray, Garfield Reynolds
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