Whoa! The new NAB survey is one to behold (and discount):
This month’s survey saw another very strong result, with many aggregate indicators reaching new highs. Business conditions reset last month’s record high, with trading, profitability and employment all reaching fresh highs. Business confidence also set a new record and implies that conditions will remain strong in the near term. This is also suggested by forward orders and capacity utilisation which also toppled previous highs. The strength in capacity utilisation points to an expansion in business investment and ongoing hiring, even as we pass the rebound phase in the economy and move through the JobKeeper hurdle. Indeed, reported cashflow has maintained its strength over recent months and the survey measure of capex is also at a new high – suggesting that the strong expectations for business investment in the NAB Quarterly Survey may be beginning to materialise. The services sectors and mining led the gains in the month, but all sectors are well into positive territory. By state, conditions have also strengthened everywhere in 2021. Price pressures appear to be building with survey measures trending higher, but for now official measures and the inflation outlook remain soft.
The charts scream that Australia is overheating with an inflation breakout imminent as the output gap craters:
Advertisement
The full text of this article is available to MacroBusiness subscribers
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.
