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 been less than promising.
According to NAB’s latest monthly business survey of 400 firms conducted around the middle of May, business conditions have deteriorated to 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. However, the latest index reading of 1 is definitely at the bottom of normal territory.
The latest reading of the confidence index jumped from April’s figure of 0 to 7, slightly above 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.