The NAB Business Survey and its sub-indices is arguably the most important economic release each month because of the breadth of the economy it covers.
So the release of this month’s survey showing a fall in both business confidence (+5) and business conditions (+1) is worrying. Indeed the fall in both these measures from 9 and 8 respectively back in July to just 5 and 1 now tells the story of an economy that is slowing – possibly materially so.
Certainly both these measures are still positive but the fall in profits to 0, the employment index to -4, and forward orders to -1 tells the story.
The NAB does not guild the lily in their analysis saying that, “The multi-year high for business conditions in July appears to have been a flash in the pan.”
This survey has seen the NAB revise their outlook for economic growth “modestly: 2014/15 2.8% (was 2.9%) and 2015/16 3.2% (was 3.4%). Unemployment rate still to peak at around 6½%. No change likely in cash rate until near the end of 2015.”
It’s not a pretty release and it is a troublesome turn for an economy in need of transition.