NAB: A rebound in business conditions for December, but will it last?

Mr. Alan Oster, NAB’s Chief Economist, expresses his take on a rebound in the Australian business conditions for December.

Key Quotes:

“The rebound in business conditions is certainly encouraging, but at this stage we are not getting too carried away with the result. Stronger business conditions in December largely reflected unexpectedly strong improvements in some industries, which might not be sustained, while other indicators were generally mixed as well. As for business confidence, the stability we have seen for some time now has been welcome, but it does not fully reflect the strength in business conditions. That might suggest that business still has a high degree of concern about global uncertainties in particular”

“We were a little surprised by the strength in wholesale, particularly given much more subdued conditions in related industries such as manufacturing and retail. Retail is now the weakest industry in the Survey, which is concerning given the importance of consumption to the outlook”

“Employment conditions have remained stubbornly muted and suggest the labour market is still not generating enough jobs to bring the unemployment rate down from its elevated level. That said, the employment index does point to stronger employment growth than we have been seeing from the ABS Labour Force Survey of late”