The National Australia Bank (NAB) will release its August business survey later on this morning.
It’s the most definitive monthly report on how Australian businesses are faring, looking at confidence levels, operating conditions, along with a whole gambit of indicators on employment, capacity utilisation and the outlook for business investment.
Although not as market moving as it once was, today’s report has taken on more significance than usual given the dire set of Australian PMI gauges released last week. Whether for manufacturing, services or construction, all three indicated that activity levels contracted sharply in August compared to a month earlier.
Now markets are looking for clarity as to whether or not that occurred, turning to the NAB survey to help fill in the missing pieces. Will it show that business conditions and confidence remain strong, continuing the trend seen earlier in the year, or merely confirm what the PMI surveys told us only days ago?
We’re about to find out the answer.
Here’s the state of play.
- In July the survey’s confidence measure fell to +4, down from +5 in June, leaving it just below its long-run average of +6.
- Although a slightly disappointing outcome, it was a still a reasonable result with no industry recording a negative reading — indicating pessimists outnumber optimists — over the survey period.
- The survey’s conditions index held above its long-run average, coming in at +8 for the month. Although below the +10 level seen in June, it was well above its +5 historic average.
- It was also broad-based in nature, with conditions remaining positive in all states and territories bar Western Australia.
- The survey’s trading subindex came in at +16, down marginally on the +17 level of June, while the separate profitability measure printed at +7, down from +12 but still a robust level nonetheless.
- Elsewhere the subindex measuring employment held steady at +4, indicating the likelihood of modest employment growth in the period ahead, while the separate forward orders gauge — a lead indicator on activity levels — held in positive territory at +2.
- Though for July, not August, it hardly suggested that activity levels were about to hit the wall as communicated in the PMI reports seen recently.
- Indeed, according to NAB’s chief economist, Alan Oster, the result suggested that the “near-term outlook for the non-mining economy is a good one”.
The NAB survey will be released at 11.30am AEST.
Business Insider will have all the details as soon as it’s out.