Australian business conditions were robust in the first half of 2018 and a cyclical-peak was reached in April of that year. Although they remained well above average for some months, readings began to slip and by the end of 2018, they had dropped to below-average levels. Recent readings have added to forecasts of a slowing domestic economy.
According to NAB’s latest monthly business survey of 400 firms conducted in the latter part of June, business conditions have recovered back into the “normal range” from their worst levels since September 2014. Since the latter part of 2018, NAB’s conditions index had bounced between 3, which is on the low side of normal and 7, which is about average. After a dip below the range in May, the latest reading marks a return to this range.
The latest reading of the confidence index dropped back from May’s figure of 7 to 2 in June, below the long-term average reading of 6. Typically, NAB’s confidence index leads the conditions index by approximately one month, although some divergences appear from time to time.