The NAB Business Survey is out for June and the results are still weak. Here are the internals:
Confidence down a bit but a decent bounce in trading conditions. Profitability flat but labour costs easing. Employment still in the toilet and forward orders tanking. Inventories up and exports lousy. Not a great picture.
Looking at the sectors we get an idea of what’s going on:
And there it is, the highest reading for retail conditions since the rate cycle turned in late 2009. Conditions are still negative but the thaw is on in retail for sure.
Whether it’s sustainable is the question. To my mind it has been clearly driven interest rate cuts and perhaps government stimulus too. But if you look at the Finance and Real Estate sector in the same chart you will see a distinct downwards shift in conditions. I do not believe that this divergence can continue for long. Either borrowing and realty turn around or this retail pulse fades like the two before it.
Looking at states, we find the mining states faring OK but the big eastern states falling, especially Victoria:
This is not a disastrous report but neither is it terrible reassuring. Stimulus is working its magic but the emerging divergences are growing.
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