Early in December, business conditions had been described as “solid” by NAB economists; now they have upgraded their description to “strong”. According to NAB’s latest monthly business survey of 400 firms conducted in mid-January, its Business Conditions Index remained unchanged at 13 after revisions. This latest reading still represents well-above-average business conditions.
Bond and currency markets were reserved in their reactions. 3 year bond yields were steady at 2.27%, 10 year bond yields added 1bp to 2.87% but the local currency was slightly lower at around 80.85 U.S. cents.
Typically, NAB’s conditions index is led by its confidence index by approximately one month, although in recent months the two surveys have diverged and the condition index has led the confidence index higher in trend terms since late 2014. The confidence index increased from a revised figure of 7 at the end of November to 11 at the end of December, a figure well above its long-term average reading of 5.
