Uncertain outlook hits business confidence

Business confidence has veered into negative territory for the first time this year as an uncertain economic outlook ratchets up concern. 

Conditions for running businesses remain robust, however, with the gap between confidence and conditions growing to its widest ever recorded in NAB's business survey.

Manufacturing, construction and retail led the four-point decline in confidence to minus four index points. 

The drop to a below-zero reading suggests rising interest rates and the slowing global economy is starting to weigh on sentiment.

NAB senior economist Brody Viney said confidence tends to drop off before conditions catch up, suggesting the economic slowdown is gathering pace.

While negative confidence showed up ahead of the global financial crisis and early stages of COVID-19, Mr Viney said poor conditions sometimes never eventuate.

Conditions did soften slightly, down two points, but the +20 index point reading is still strong. 

Two indicators that tend to capture a change of direction early, capacity utilisation and forward orders, edged lower.

But capacity utilisation remains elevated based on historical averages, with the competitive labour market likely feeding into this score as firms struggle to hire and retain staff. 

The survey also revealed few signs of an inflation turnaround, with labour and input costs still high and retail prices continuing to grow at a rapid rate. 

Consumer confidence has already been trending lower for months despite consumers shrugging off the latest rate rise.

ANZ and Roy Morgan's weekly consumer confidence gauge lifted 0.2 points to 82.9, slightly higher than the 82.6 four-week average.

While the uptick was only marginal, ANZ senior economist Catherine Birch said this was the first in the indicator after a cash rate rise.

"This was the first time in the current tightening cycle confidence has improved after an increase in the policy rate, perhaps a sign households expect a pause soon," Ms Birch said.

Last Tuesday, the Reserve Bank hiked interest rates another 25 basis points, with some experts arguing it has already done enough to calm inflation and will likely resist more hikes in the new year. 

CommBank's household spending intentions index revealed a softer-than-usual Black Friday boost.

The 6.4 per cent jump in retail spending measured by the index was lower than normal, suggesting consumers are starting to respond to rising interest and higher prices.

The index, which draws on Commonwealth Bank payments data and Google Trends search data, lifted a modest 1.9 per cent overall for the month, representing a slowdown in growth.