Australian businesses are still enjoying buoyant conditions across most industries and even retailers are starting to enjoy more favourable conditions. According to NAB’s latest monthly business survey of 400 firms in April, its Business Conditions Index rose 2 points to 14 from a revised reading of 12 in March, while its Business Confidence Index jumped from 6 to 13, which is well above its long term average of 6.
While trading conditions slipped back, profitability remained solid and employment conditions improved again. Spare capacity increased but according to NAB’s chief economist Alan Oster, the level of utilisation indicated there was less spare capacity in the Australian economy than the unemployment rate implied. Retail conditions “continue to lag behind the other industries” but the retail and transport sectors were chiefly responsible for April’s higher readings.
ANZ senior economist, Giulia Lavinia Specchia said the figures bode well for the business and employment. “The details of the report were also positive, suggesting that the business sector remains on a solid footing. Importantly, labour market indicators are buoyant and point to a solid improvement in the official labour market data released next week, in our view.”
UBS economist Scott Haslem had an interesting take on the relationship between NAB’s survey and RBA rate changes. He said business conditions were at a post-GFC high which was “historically consistent with RBA rate hikes”, although as readers can see, what has been historically true has not been the case this time around.