Champagne corks popping after the release of the NAB’s March monthly survey a few weeks ago might have been a little premature. That’s the message in the larger quarterly survey released this morning.
The survey for Q1 2015 showed confidence dipped to zero from +2 in Q4 2014 and +6 in Q3 2014. The NAB says that “this is consistent with a pull back in confidence in the February monthly survey, although this was completely unwound in March.”
So maybe it’s not as bad as it looks at first.
Conditions, as reported by survey respondents, fell to +2 from +5 last quarter. Trading and profitably were also lower, which suggests something might have gone awry in the first quarter for Australian business.
But, in explaining the difference between the outcomes in the quarterly and March monthly surveys NAB chief economist Alan Oster told Business Insider that the quarterly survey was taken about a month before March’s survey was conducted – in the last week of March and early April – and that he felt that “activity was better than expected in March.” He added that based on the downward movement of the forward projections for conditions business didn’t see the uptick in activity which lay ahead.
That’s interesting from a monetary policy standpoint because it means that when the RBA held its business liaison as part of the bank’s regular check of the economy, it’s likely no-one flagged the good news coming, which means the next time the RBA checks in on them, it might hear a very different story.
It doesn’t mean a rate cut in May is off the table. But add this insight from Alan Oster to surging house prices in Sydney and the hurdle for a rate cut seems to be a little higher than it was.