NAB Monthly Business Survey, June 2016



NAB’s June Business Survey was undertaken right amidst the heightened uncertainty around the Brexit referendum, and ahead of the Australian Federal election.

Despite this, firms in the Survey continued to report very high business conditions, pointing to another strong quarter for the non-mining economy. The business conditions index rose from an already elevated level, hitting +12 index points in June, which is consistent with the post-GFC highs for the series.

Encouragingly, the improvement was driven in large part by a lift in employment conditions, which are back above long-run average levels. Profitability also improved in June, while trading conditions (sales) were unchanged at very high levels.

According to Alan Oster, NAB’s Chief Economist, “we are very much seeing a continuation of the positive trends evident in the Survey for some time now.”

Overall, business conditions were up 2 points to +12 index points in June, which is well above the long-run average of +5. On the components of business conditions, Mr Oster noted that “strong activity seems to be having a positive effect on labour demand in the Survey, despite recent “questionable” official labour market statistics suggesting otherwise”.

By industry, there is still some (albeit mixed) evidence in the Survey that improvements in the non-mining economy have become more broad-based, while mining also looked a little better. Indeed, most industries reported a rise in business conditions this month, although retail was a notable exception.

“The deterioration in retail coincides with big declines in retail price growth, highlighting the competitive and cost pressures facing the industry” said Mr Oster.

“However, we should be able to take comfort in the trends we are seeing across many other industries”.

In fact, even though the Survey was undertaken during the worst of the volatility in financial markets post the Brexit vote, business confidence actually improved – rising 3 points to +6 index points.

According to Mr Oster, “this suggests that firms are looking through external uncertainties, choosing to focus on the positives they see in their own business, at least for the time being”. He goes on to say that “it is encouraging to see firm’s sentiment is holding up, particularly as we head into a period of political uncertainty.

Leading indicators from the Survey are looking reasonably good, with forward orders and capex both improving, although spare capacity rose as well – probably reflecting rising capacity, rather than falling demand. “These results generally tell us we can be confident about the near-term outlook”, said Mr Oster.

Overall the Survey suggests the RBA should be reasonably comfortable with the present state of economic activity, even in the wake of recent events that cloud the outlook. However, the view on inflation is arguably more important at this juncture, and the Survey is not suggesting any meaningful turnaround in near-term inflation pressures.
These trends justify the highly accommodative setting for monetary policy, but while the August RBA meeting (post Q2 CPI) is likely to be ‘live’, current information suggest rates will remain on hold (although it is likely to be a close call).



Download media content

NAB Chief Economist Alan Oster on the June Monthly Business Survey – shows strong conditions for Australian businesses

WAV 4 MB Download

Business conditions increased despite the UK referendum and Australian federal election

WAV 5 MB Download

Sector-by-sector results from the June Monthly Business Survey: all sectors, bar retail, are performing well

WAV 5 MB Download

State business conditions and confidence: NSW

WAV 3 MB Download

State business conditions and confidence: Victoria

WAV 3 MB Download

State business conditions and confidence: Queensland

WAV 2 MB Download

State business conditions and confidence: South Australia & Northern Territory

WAV 3 MB Download

State business conditions and confidence: Western Australia

WAV 5 MB Download

NAB Economics’ forecasts for local and international economic growth and employment

WAV 3 MB Download

UK Referendum will have very little direct impact on Australia

WAV 2 MB Download


JPG 47 KB Download


JPG 28 KB Download

Related Articles

  • Climate

NAB backs new renewable wind farm in Far North Queensland

NAB today announced it is the only Australian bank providing project finance for global renewable energy power producer Neoen to build a $370 million wind energy hub in Far North Queensland.

  • 20.09.2021
  • Time to read 2 min read
  • Community

BBQs at the ready for Western Australia’s first AFL Grand Final

Australia’s favourite past time of firing up the BBQ will be in overdrive this weekend with Western Australians expected to spend big and celebrate hard.

  • 20.09.2021
  • Time to read 3 min read
  • Economy

NAB CEO Opening Statement to the House of Representatives Standing Committee on Economics

Current forecasts show 80 per cent of eligible Australians will have had their first jab within three weeks, and their second jab by mid-November. This is our light at the end of the tunnel.

  • 08.09.2021
  • Time to read 4 min read

Quick links

National Australia Bank — NAB

Sometimes When The Unexpected Happens, We Realise What We Truly Value. Whether A Home, Farm, Business Or Your Passion, NAB Is Here To Support You.

Business Research and Insights

For more business news and analysis, visit NAB’s Business Research and Insights.