NAB Business Survey Shows 'A Patchwork Economy With Little-To-No Momentum'

Getty/ Joe Raedle

Australian business conditions fell for the second consecutive month according to the NAB’s Monthly Business Survey for December.

The print of +4 for conditions, down from 5 in November and an impressive 12 in October, reveals business conditions are back within a point of their long run average. But the NAB said that “the strong result for business conditions in October now clearly looks to be an anomaly.”

That doesn’t mean the economy is weak but the pullback from the big October spike highlights that business conditions within the economy remain average at best.

Looking at the confidence numbers the increase from +1 to +2 masks the fact that it was a move of just 0.1 which saw the figure rounded up this month.

On the employment front, which recently has been the one bright spot in the economy, the NAB’s employment sub-index fell to -1 raising from 0 recently. This recent strength is unlikely to be maintained according to NAB Chief Economist Alan Oster who said in a note accompanying the release:

The official labour market also showed surprising resilience in December, but could reflect a statistical catch up (relative to other labour market partials). Certainly the employment series in the Survey has weakened and is now below average levels. With soft business confidence and weak forward orders there is doubt that the strength in the official estimates can be maintained.

It all adds up to a need for further cuts in the RBA’s cash rate Oster says and he still expects, “two rate cuts in 2015 but timing very dependent on data flow and could start a touch later.”

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