The September NAB Business Survey is out and while business confidence rebounded somewhat, underlying conditions deteriorated. Here are the internals:
NAB observes:
Business conditions slipped in September, to be well below long-run average levels. This appears to be related to the impact of the high AUD, tighter fiscal (both state and federal) policy and weaker commodity prices on the back of global (and Chinese) economic uncertainties.
Businesses were slightly more upbeat in September, though levels of overall business confidence remain down beat – particularly in mining and manufacturing. Announcements of further policy stimulus in major international economies and speculation of more RBA rate cuts may have helped.
The softening in activity was driven by broad-based declines in trading conditions, profitability and, to a lesser extent, employment conditions. Conditions deteriorated heavily in wholesale, retail and transport & utilities, and improved modestly in construction. Conditions fell back heavily in Victoria and SA.
As well as much weaker activity readings (business conditions, stocks and capacity utilisation) in the month, indicators of future demand such as forward orders fell heavily in September. Capital expenditure also continued to weaken and credit demand softened. Overall, the survey implies that underlying demand and GDP growth will be around 2¾-3% in Q3 2012 – slightly below trend. But if the September monthly readings were repeated in coming months, the slowdown implied would be much more pronounced.
Labour costs growth eased in September, to be close to ‘normal’. Product prices growth was again subdued, while purchase costs pressures softened modestly. Retail prices growth increased a touch, but remains low.
The key themes here are falling capex, growing mining weakness, a moribund broader services economy and a weakening labour market, both directly and now showing up in weaker wages growth.
Pretty much exactly what I expected. Plenty here for a November cut.
