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The Australian and New Zealand Banking Group analysts offer a quick reaction to the Australian NAB Business Survey that disappointed in December.

Key Quotes:

“Business conditions fell 1.6 points in December, putting an end to the gradual improvement over the previous few months. Business confidence dropped to -1.9, the lowest level since July 2013.

The employment index was fairly stable at +4.2 and remains the standout component at 2.2pts above its long-run average. Forward orders improved 0.9pts, albeit not enough to get back into positive territory.

Capacity utilization was down 0.2ppts to 80.9%. Profitability fell 2.5pts from its November eight-month high, while trading also fell 1.5pts.

We expected that bushfires, smoke haze and a weaker Christmas shopping season could have had a negative effect, but NAB indicated that the impact of the bushfires may not yet be apparent in the results.

NAB has previously warned that caution should be taken when interpreting the data around the Christmas/New Year period.

We will look to the January survey due out in two weeks to get a better idea of the underlying momentum.”