Non-mining recovery shows signs of stalling: NAB survey

The non-mining recovery shows signs of stalling, according to NAB’s quarterly business survey.

NAB chief economist Alan Oster said the results pointed to a degree of comfort in the local economy.

Australia’s non-mining recovery continued through the September quarter, but momentum is showing signs of stalling, the latest NAB Quarterly Business Survey has revealed.

The reading on current business conditions dipped 4 points to +7 due to a drop in trading conditions and profitability, although the confidence index gained two points to +5.

NAB chief economist Alan Oster said the results pointed to a degree of comfort in the local economy, despite a range of uncertainties threatening to impact global activity in coming months.

“Business conditions are still well above long-run average levels and are consistent with solid rates of activity in the non-mining economy right now,” Mr Oster said.

“Firms are telling us that the near-term outlook is still a good one.

“They don’t anticipate any clear deterioration in business conditions over the next three to twelve months, while hiring intentions for the next year actually picked up markedly and capital expenditure plans remain much stronger than what some other indicators might suggest.”

Mr Oster said service sectors remained the outperformers, although retail continued to lag.

“The spread of conditions between the major service industries and the worst performers widened a little in the quarter, in part driven by a concerning deterioration in retail and wholesale conditions,” he said.

“Given the importance of household consumption to the growth outlook, this is something we will continue to monitor closely.”

The data also showed “very subdued” inflation, but is seen unlikely to push the RAB to cut rates again this year.

“The outlook for business activity in this survey should make the RBA reasonably comfortable, but the inflation picture is less encouraging,” Mr Oster said.

“However, in light of recent housing market trends, on balance we think a rate cut this year is unlikely, barring an extremely weak third quarter CPI outcome.”