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Following the release of December month National Australia Bank’s (NAB) Business Condition and Business Confidence data, analysts at Westpac came out with their analysis of the data. Overall, the research anticipates soft forward-looking employment indicators and a likely lag in business conditions.

Key quotes

The business confidence index fell further, down 2pts to -2. That is the weakest reading since July 2013. As to business conditions detail for December: trading conditions fell by 1pt to +5; profitability fell by 2pts to +1; and employment conditions moved sideways, at +4.

Subsequent to this survey, the outbreak of the coronavirus has emerged. This will adversely impact the Australian economy in the short-term – particularly international tourism and education – and will dent confidence.

The survey suggests that employment conditions at this level are consistent with job gains averaging 18k per month near-term (down a little from the 2019 average of 22k per month). Such an outcome would – subject to a steady participation rate – hold the unemployment rate broadly unchanged.

Forward orders are weak at -1, albeit that is a small improvement on the low of -4 over the months May to August (around the time of the 2019 Federal election).

A rebound in response to policy stimulus has yet to materialize.