By James Glynn
SYDNEY--Australia's business confidence and conditions fell in November, but capacity utilization rose, adding to concerns that the economy is moving closer to hitting capacity constraints.
Business confidence fell 5 points to 1 index point in November, retracing some of the gains made over the last six months, according to a survey released by the National Australia Bank on Tuesday.
Meanwhile, business conditions fell 3 points in 7 index points in November.
Declines in profitability and trading more than offset the minor gain in employment, said Sally Auld, the chief economist at NAB.
The weakness comes as the Reserve Bank of Australia holds a policy meeting, which some economists have warned could result in hawkish guidance from the central bank amid fears about a worsening inflation outlook.
Weakness was broad-based across industries and geographies in November, with forward orders and exports falling.
Moreover, capacity utilization rose for the fourth consecutive month and is now above the long-run average in six of the eight industries in trend terms, up from five industries last month, she said.
"Capacity utilization is now at an 18-month high and is running over 2 percentage points above its long-term average. This will add to concerns that the domestic economy is close to pushing up against capacity constraints," Auld warned.
Write to James Glynn at james.glynn@wsj.com
(END) Dow Jones Newswires
12-08-25 2000ET
