AUD: NAB Business Survey Point to a Very Favourable Business Environment - NAB
Research Team at NAB, notes that the NAB Business Survey continues to
point to a very favourable business environment for Australian firms,
despite giving up some of the strong gains witnessed in last month’s
“Business conditions eased back to +9 points in April, but this was still an above-average result that is consistent with an ongoing recovery in the non-mining economy. Service industries have persistently been the best performers, although other sectors including manufacturing and transport are looking relatively upbeat – as the benefits of lower oil prices and earlier AUD depreciation continue to flow through.
Business confidence was somewhat resilient to the fall in conditions, but ebbed lower in the month to be back to slightly below the series average.
Looking through the month-to-month volatility in the Survey, these results confirm a continuation of the favourable business environment that has helped to underpin the non-mining recovery.
We continue to look for signs that the recovery is broadening, and while evidence of that was a little less compelling this month, solid results for manufacturing and transport – as well as a bounce-back in retail – are encouraging. Low interest rates and a more competitive currency (even given its recent strength) remain key to ongoing improvement, especially in the context of global economic uncertainty.
Importantly, the survey suggests that inflation pressures remain subdued, while core inflation in Q1 hit its lowest level since the RBA began inflation targeting, according to the ABS. This means that despite positive outcomes in activity data, the RBA has scope to further cement the non-mining recovery with an additional rate cut – a move that seems more likely than not at its May’s policy meeting (although we see it as a close call).”