The ongoing recovery in the non-mining sectors of the economy continues and remains close to “post-GFC highs” according to NAB’s latest Monthly Business Survey. Its Business Conditions Index remained at 10 (April’s figure was revised from 9 to 10), while the Business Confidence Index fell 2 points from 5 to 3.
NAB chief economist Alan Oster said the drop in confidence was mostly limited to the manufacturing and transport sectors while other forward indicators such as spare capacity were “reasonably good” and noted signs of a moderate pick-up in inflation.
Westpac senior economist Andrew Hanlan thought the numbers suggested business conditions were “positive outside of mining and construction” and added, “This confirms that the non-mining sectors are benefitting from low interest rates and a sharply lower currency.” He too noted the fall in spare capacity, although he linked it to weak investment spending.
Australian bond yields generally ignored the positive result and followed offshore leads. On the day implied yields on 3 year bonds dropped 3bps to 1.55% while yields on 10 year bonds fell 5bps to 2.05%.
