So, the NAB Survey for November is in and shows an economy going OK. Here are the key metrics:
Confidence and conditions are range bound and pretty soft. But there is clearly an improvement in operating conditions with forward orders, stocks, capacity utilisation and exports improving. The big one, employment, also jumped but it too is range bound at this stage. Labour costs suddenly spiked again too. Put this together with the jump in purchase costs and, in normal circumstances, there’s no way the RBA would be cutting around this type of survey. The weakness lies ahead.
Except for the usual suspects:
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Business conditions were generally better across most industries in the month, although there were some heavy offsetting falls. Conditions rose notably in transport & utilities (up 13 to +10 points), offsetting the previous month’s decline, while they also strengthened in mining (up 11), retail (up 8 ) and wholesale (up 7). In contrast, conditions deteriorated heavily in construction (down 14 to -12 points) and manufacturing (down 10). In seasonally adjusted terms, conditions were strongest in mining (+24), recreation & personal services (+12) and transport & utilities (+10), and weakest in manufacturing (-21) and construction (-12). Trend conditions were strongest in mining (+23) and weakest in manufacturing (-14).
Unsurprisingly, the same spread is apparent across states:
It’s important to remember what this OK economy actually is. Look at the business conditions index for Australia, barely above zero. It’s a new normal.
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.
