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9 Sep 2014
Australian business confidence/conditions ease in August
FXStreet (Bali) - Australia's business conditions came at 4 vs 8 last, while business confidence was 8 vs 10 last, both weakening although still in an uptrend.
Key Points (NAB)
Business confidence remains resilient despite easing a little in August,supported by positive forward orders, subdued cost pressures and more stable consumer confidence. Positive business conditions are also helping despite falling back in the month. Confidence varies significantly across industries, with construction firms the most optimistic by a large margin.
The jump in business conditions last month was surprising, so some payback in August was expected. The conditions index unwound most of July’s narrowly based gains – manufacturing, construction and retail fell most. Forward orders also eased, but remain at levels implying stronger Q3 demand.
A sharp drop in profits and sales drove the unwinding in August, although both remain positive. The employment index was unchanged at low levels, conforming with expectations of a relatively jobless recovery. Capex, capacity utilisation and forward orders all improved over the past 12 months, but trend conditions in the ‘bellwether’ wholesale industry remain weak. Our wholesale leading indicator implies soft underlying conditions and below trend economic growth in Q3, with moderate near-term demand growth in prospect.
NAB forecasts broadly unchanged following modest Q2 GDP growth (as expected). Rates still on hold till late 2015 – with the move then up . Only a sharp deterioration in the labour market (not expected) could see rate cuts.
Key Points (NAB)
Business confidence remains resilient despite easing a little in August,supported by positive forward orders, subdued cost pressures and more stable consumer confidence. Positive business conditions are also helping despite falling back in the month. Confidence varies significantly across industries, with construction firms the most optimistic by a large margin.
The jump in business conditions last month was surprising, so some payback in August was expected. The conditions index unwound most of July’s narrowly based gains – manufacturing, construction and retail fell most. Forward orders also eased, but remain at levels implying stronger Q3 demand.
A sharp drop in profits and sales drove the unwinding in August, although both remain positive. The employment index was unchanged at low levels, conforming with expectations of a relatively jobless recovery. Capex, capacity utilisation and forward orders all improved over the past 12 months, but trend conditions in the ‘bellwether’ wholesale industry remain weak. Our wholesale leading indicator implies soft underlying conditions and below trend economic growth in Q3, with moderate near-term demand growth in prospect.
NAB forecasts broadly unchanged following modest Q2 GDP growth (as expected). Rates still on hold till late 2015 – with the move then up . Only a sharp deterioration in the labour market (not expected) could see rate cuts.