by Chris Becker
Oh come on corporate Australia – lift your game! The NAB Business Survey is out showing conditions improving, but confidence lagging.
Key takeaways (emphasis added)
- The conditions index jumped 5 points to +11 in August, after losing a little ground last month, lifting the trend index to its highest level since late 2009.
- By component, both trading conditions and profitability recorded a notable improvement, but the employment index remains at very subdued levels.
- This outcome adds to the mounting evidence that AUD depreciation and record low interest rates are having the desired effect and helping to offset the weakness in mining.
- Services sectors continue to outperform, while retail has improved considerably.
- The ‘bellwether’ wholesale industry remains weak, but probably reflects margin squeeze due to AUD depreciation as other leading indicators (aggregate forward orders and capacity utilisation) have improved.
- Confidence pared back further in August (from +4 to +1), unwinding the post budget gains and hitting its lowest level since mid-2013.
It’s all in your favour:
- the adults are in charge
- interest rates at near record lows (and going lower)
- balance sheets laden with cash
- huge slack in the labour force
- lower AUD means more export demand
- the adults are in charge
Oh, okay now I see your point.
More from NAB’s Chief Economist Alan Oster:
While confidence tends to track conditions quite closely, recent financial market ructions and China growth concerns appear to have had an unnerving effect on business – albeit not enough to send confidence into negative territory (a good outcome given the degree of market volatility). Confidence eased in most industries, although mining and construction recovered some of last month’s sharp declines.
NAB are still very upbeat about 2016, forecasting above trend growth of 2.4% next year and 3.1% for 2017 with unemployment tapering. Now there’s some confidence!
And the AUDUSD liked the news too, lifting up from the floor to almost 70 cents:
Do we need to start piping in Matthew Mcconaughey Wolf of Wall Street “humming” speech into boardrooms to get things moving?