Business sentiment in Australia is on the slide this year, according to the January survey of confidence and conditions from National Australia Bank.

Business conditions eased to a reading of 5 in January from a revised 6 (previously 7) in December. Some slippage was already occurring late last year, but the series remains comfortably above its long-run average of 1, dating from 1989.

Business confidence held steady at 2 in January, but that was because the December reading had been revised lower from 3. Confidence, which better measures future expectations, was choppy last year, partly due to volatility in financial markets and concerns about Chinese economic growth, and those issues reared their head again at the start of 2016.

While low interest rates continue to offer support to an economy still managing its transition away from a commodities boom, general business sentiment in Australia has also improved since prime minister Malcolm Turnbull assumed the leadership of the government last September.

However, recent months have seen growing debate about tax reform, including a mooted increase in the goods and services tax until that was seemingly scotched by the PM this week. Until there’s a clearer idea on how potential tax reforms will play out, if at all, businesses – and consumers – may start to pull their heads in.

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