Australian business confidence rose sharply to 6 index points in the second quarter from the previous quarter’s print of 0, according to National Bank of Australia’s (NAB) quarterly business survey.
It is worth noting that the survey was conducted after elections. Hence, the rise in confidence could be associated with outcome of the Federal election and also with the firming expectations of rate cuts.
While the confidence ticked higher, the business conditions index decreased 3 points to +1 in the second quarter, extending the downtrend since early 2018 and is now just below average.
Key quotes from NAB Group Chief Economist Alan Oster
“For now, the survey suggests ongoing employment growth but given the recent trends in the forward-looking measures, we will continue to watch closely. Our worry is that the slowdown in activity may translate into a more substantial weakening in labour demand.”
“Declining capacity utilisation and weak surveyed price measures suggest that inflation outcomes are likely to be meek for some time. The impact of labour demand on wage growth will remain an important dynamic in this sense – with slack already evident in the labour market, any weakening in labour demand could well see further action from the RBA on rates to bolster the economy. “
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