NAB business survey is a disaster for wages

The October NAB business survey is out and remains fugly.

Overall, the survey saw a modest improvement in September. Conditions are around the levels seen in early 2020 but remain well below average. The improvement in conditions was driven by a rise in all three subcomponents – trading and profitability are in positive territory, likely reflecting improving activity as the economy opens up. The employment index remains negative, suggesting that business remains cautious and not yet ready to restore previous employment levels. The impact of the virus remains evident in Vic where conditions are notably weaker than the other states. On the other hand, conditions are now above average in WA, SA and Qld pointing to an ongoing recovery in those states. NSW remains negative but also improved in the month. Confidence saw further improvement in the month and is well above the March trough, but remains in negative territory. While confidence and conditions have rebounded relatively quickly, forward looking indicators remain soft after only seeing marginal gains in recent months. Forward orders remain very weak which likely is a driver of weak confidence and suggests that capacity utilisation will likely only gradually recover.

Some points:

• Non-virus states much stronger than virus states, irrespective of lockdowns.
• Forward orders, exports and capex are still terrible, indicating weakness ahead.
• Capacity utilisation is a disaster, still hovering around the levels fo of the 1990 recession before we slash public support.
• Jobs are terrible everywhere except retail which is the only place left to spend!
• Forget wage increases despite crashed immigration.
• Forget immigration while wages crater.

Full report.