NAB survey improves and deteriorates

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The NAB survey is out for March and the news is very mixed:

Key messages from the Survey: Survey results were mixed this month. Business conditions saw a welcome increase to above average levels with each subcomponent of the index rising. The employment index itself remains well above average, suggesting that for now, survey indicators of labour demand remain favourable. Against this, business confidence (the expectation for conditions going forward) weakened further in the month and continued the below average run. Other forward looking indicators – capacity utilisation and forward orders – showed some improvement but remain at or below average. The pattern of business conditions and confidence across states appears to have shifted somewhat with the gap between the east and west narrowing a little over recent months. Conditions remain most favourable in Tasmania and NSW, but have weakened in QLD and VIC. By industry, conditions remain most favourable in mining and weakest in retail. While the pickup in conditions this month is encouraging, conditions are well below the levels seen in early 2018 and forward indicators point to a risk of further slowing in momentum in the business sector. Elsewhere in the survey, measures of capex and cash flow generally continue to track down.

The key for short term markets is the firming employment indicator despite rapidly waning confidence:

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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.