Australia's NAB business confidence improves, conditions lower

Australia's NAB business confidence came at 6 vs 4, while conditions stood at 7 vs 9.

NAB Monthly Business Survey - August 2016

The results from this month’s survey remain broadly consistent with our prior view of the economy and the near-term outlook. It points to a patchy, but sustained, improvement in the non-mining economy, with the major services sectors and construction leading the way.

That said, recent negative movements in retail and wholesale conditions will be a cause for concern if they continue, and we are watching to see if they represent the start of a new trend. Beyond the near-term the outlook becomes more uncertain, as the effects of previous AUD depreciation, higher commodity exports and the housing construction cycle begin to wane.

All of these factors are expected to come to a head around 2018, and the economy will likely require additional policy support from the RBA ahead of this to firm up growth and stabilise the unemployment rate. NAB economics currently expect two more 25bp cuts by the RBA in mid 2017. NAB’s latest Australian economic forecasts will be available on Thursday.