The NAB Quarterly Business Survey, the longest running survey of its type in Australia, showed a continuation of the very upbeat conditions for firms into the September quarter.
Confidence has not been quite as exuberant, with many firms still worried about margin pressures and the demand outlook. Despite that though, we are still seeing solid expectations in terms of the near-term outlook, while business expectations for the longer-term (1 year ahead) outlook have generally strengthened. Investment expectations for the next year lifted further, with most industries pointing to above-average capex. Employment intentions continue to trend higher and firms are now indicating much greater difficulty finding suitable labour. While most industries are performing well in the Survey, conditions in the retail sector deteriorated further, which is a concern given the importance of consumption to economic growth. A tighter labour market and tentative signs of a lift in wage pressures in the Survey could help to bolster demand conditions for retailers, but other challenges will likely remain.
A majority of industries recorded an improvement in business conditions during the quarter, and are holding at positive levels, but retail and wholesale were the main exceptions, with retail conditions dropping back into negative territory. “While most of the business sector is doing very well right now, including mining, reads on the retail sector have been quite poor both in our Survey and elsewhere, which is concerning given the importance of consumption to the growth outlook. There are, however, a few reasons to be optimistic when we look at some of the trends evident in the labour market and recent signs of improvement in consumer confidence” according to National Australia Bank Group Chief Economist Alan Oster.
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A National Australia Bank insight