Heroic NAB survey holds on

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The NAB Survey is out for December is showing heroic but doomed resilience:

The NAB Business Survey is showing encouraging resilience in the non-mining sector recovery, as business conditions hold-up at well above average levels . Business conditions remained at +10 index points in November, supported by strong trading conditions and profitability. In contrast, employment conditions disappointed – albeit still positive. Service sectors (including retail) are outperforming in terms of business conditions, while mining and manufacturing were both negative. In fact, the survey is showing a widening gap between deteriorating mining/mining services (-21) and the rest of the economy, as mining continues to weaken. Capacity utilisation – a useful measure of the underlying health of the economy – eased a little this month, but the trend remains distinctly positive, which bodes well for business investment and the labour market. Forward orders also recovered some of the lost ground from last month, shifting back into positive territory – indicative of on going near term strength.

• Business confidence recouped some of last months decline, but remains somewhat subdued in light of the persistent strength in business conditions. The confidence index rose to +5 index points, which is still marginally below the long run average. Given improved prospects for the domestic economy (outside of mining), relatively subdued confidence is most likely a reflection of the uncertain global economic environment. The improvement was reasonably broad based, with no industry groups reporting a deterioration in the month (although mining remains negative).

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.