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The Reserve Bank of Australia will probably not cut interest rates again this year, despite a gloomier outlook for the mining sector, according to economists at a major bank.
The economy was experiencing some softness but a positive outlook for investment and exports suggested that moderate growth would be evident towards the end of the year, National Australia Bank (NAB) said in its Global and Australian Forecast.
"Looking into the third quarter, our survey suggests that conditions in wholesale and transport have broadly continued to improve, manufacturing and construction have improved modestly but that mining has deteriorated further," the report, published on Tuesday, said.
"For the remainder of 2012/13, GDP (gross domestic product) growth is expected to pick up as the interest rate cuts over the past year begin to bolster consumption."
The pickup was expected to be enough to convince the central bank to keep interest rates on hold for the remainder of the year, with some potential for rises in 2013.
"The expected profile of growth and inflation implies that the RBA (Reserve Bank of Australia) will stay on hold until the middle of next year," NAB said, although it described this as a "line ball call".
In its accompanying monthly Business Survey, NAB said that business confidence was weaker in August, although actual business conditions were stronger.
NAB's index of business confidence fell back to minus 2 from plus 3 in July on the back of global uncertainty centred on Europe and the United States, along with local concerns about the mining boom.
Business conditions improved modestly - rising to plus 1 from minus 3 in July.
This was influenced mainly by improvements in trading conditions, profitability and employment.
NAB noted that both indices were still subdued.
"Overall conditions remain relatively lacklustre compared to history," it said.
"The pickup in activity was reasonably broad-based and particularly apparent in interest-sensitive industries - wholesale, retail and construction.
"Trend confidence has remained below its long-run average level (of plus 6 points) for over a year - this may reflect a combination of factors, including uncertainty about the global economic outlook, worries about the slowing in China, and especially the longevity of the current mining boom."
Forward orders were up two points to minus two in August.
Citi Research economists said the survey showed how sensitive the business world was to declining commodity prices and news of about the mining boom.
"The change in mining sentiment is a new development and relates to the decline in hard commodity prices," they said.
"Previously it was other less favourably trade-exposed sectors that had weighed on the headline index, but mining is now the worst-performing sector among those surveyed."
Based on information provided by and with the permission of the Western Australian Land Information Authority (2013) trading as Landgate.