The NAB survey is out and has finally taken on the shape of a catch-up boom proper:
Business conditions rose to a record high in March, driven by strong increases in all subcomponents – which are all now also all at record highs. The strength in conditions is evident across all states and industries. Forward orders – which also rose to record levels – points to ongoing strength in activity with the pipeline of work rising further. While business confidence edged lower in the month, it remains at a high level, suggesting that firms themselves are optimistic that the strength in activity will continue. Alongside the strength in activity, capacity utilisation rose further in the month and is now well above average. Encouragingly, capacity utilisation is at or above pre-COVID levels in all industries except for rec & personal services – which unsurprisingly is still impacted by pandemic related restrictions. Taken together, the strength in conditions alongside high levels of capacity utilisation, point to an economy that is continuing to grow at a relatively healthy rate as we transition through the wind-up of the JobKeeper program and beyond.
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Great stuff. If only it would last. I do not expect it to. Ahead we will see catch-up growth ease and fiscal stimulus withdrawal in the months ahead. Then falling terms of trade and macroprudential tightening in 2022.
Enjoy it for now. These are rare conditions. Full report.