The NAB has released its monthly Business Survey for August noting that confidence remains “resilient” even though it dipped back a little from 10 in July to 8 in August. That’s a good result still and the NAB says that confidence remains “surprisingly robust”.
The reason they are looking a bit askance at their own survey, or at least the confidence element of it, is that when viewed from the ground up, that is via the sub-indices, it is easy to think confidence should be weaker.
Trading fell from 13 to 7, profitability all the way from 10 to 3 and forward orders dipped from 5 back to 1. Stocks were unchanged, exports fell from 2 to 0 and employment remained unchanged at 0.
It all added up to actual business conditions dropping back from a 4 year high of 8 to 4.
But, that’s not bad news according to the NAB which wrote in a note accompanying the release that:
At this level, business conditions are still well up on 2013, but are significantly lower than the pre-GFC years and slightly below the long run average of the series (+5 since 1997) –suggesting the moderate economic growth environment is set to continue. In large part, the decline in business conditions during the month reflects an unwinding of some of the narrowly based gains seen in July. This was particularly stark in manufacturing, which dropped 13 points, following an 18 point improvement in July, to-4 index points –equal second lowest of the industries (along with mining). Looking through the monthly volatility, the trend in business conditions still looks reasonably positive, lifting 1 point to its highest level since 2010 (+5 points).
It adds up to a picture of moderate growth in the quarters ahead according to the NAB which will keep the RBA on hold until “late 2015” before rates move higher. “Only a sharp deterioration in the labour market (not expected) could see rate cuts” they said.