It sure looks like the RBA is about to get its wish. Interestingly, NAB added another hike to 4.6% terminal to its outlook despite this survey.
Business conditions continued to ease in May with notable declines across the trading, profitability, and employment subcomponents. The fall in conditions now appears to be accelerating, and while they remain a touch above their long-run average they are well below the levels we saw in early 2023. Confidence fell to -4 index points in the month and has tracked at or below 0 since February – with most industries now in negative territory. Forward orders fell sharply and if sustained will likely see a further sharp slowing in demand. This is particularly evident in the consumer sector, where forward orders in both retail and wholesale fell very sharply and are now the weakest of all industries. That said, while activity is now clearly slowing, capacity utilisation remains well above pre-pandemic levels and has shown little signs of a pullback to date. This has been reflected on the cost side where both input and output price growth continue to track at a high rate.
Jobs market breaking down:
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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.
