Business confidence, conditions slightly higher: NAB
Business confidence has improved for the first time since July, NAB says, but overall the climate remains weak.
Business confidence and conditions rose slightly last month, according to National Australia Bank.
NAB’s monthly business survey for October showed business confidence rose to two index points from zero in September, while business conditions rose to three points from two in September.
The first improvement in NAB’s business confidence survey since July comes after three cuts in official interest rates by the Reserve Bank and after the start of the federal government’s tax rebate, as well as after record highs in the US sharemarket amid a perceived lessening of risks from US trade policy.
Business conditions have now risen two months in a row after hitting a five-year low in August.
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Forward-looking indicators have improved slightly and point to a stabilisation in conditions, but measures of the business climate remain well below their long-term averages, according to NAB.
“The improvement in conditions was driven by an uptick in trading and profitability with the employment index flat,” said NAB chief economist Alan Oster.
“Ongoing reads of below-average trading conditions and profitability will likely put at risk the continued strength in the employment component.”
Mr Oster said recent strength in mining appears to have faded over recent months, so the services sectors are seeing the best businesses conditions, while retail and wholesale remain the weakest.
By state, NSW currently sees the best conditions while Queensland and Victoria are weakest.
Pricing pressure remains weak, with final products prices still growing at a low rate – notwithstanding a pick-up in retail price growth and input price growth tracking at a higher pace.
“Overall, our read is that the survey continues to point to weak outcomes in the private sector, and that business’s own outlook is for more of the same,” Mr Oster said.
“Acknowledging that the impact of recent rate cuts will take time to flow through the economy, it appears that the support provided by both fiscal and monetary policy this year has done little to offset the slowdown in the business sector.”
It comes as Resere Bank Governor Philip Lowe continues to say the economy has reached a “gentle turning point”, after growth in the year to June fell to the weakest pace since the global financial crisis.
The survey was conducted from October 25-31.
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