Q3 2016 NAB Quarterly Business Survey

Share

Share

The quarterly iteration of the NAB Business Survey provides additional insight into Australian business than the regular NAB Monthly Business Survey. This publication offers a more in-depth probe into the conditions facing Australian business, and provides extra information about how firms perceive the outlook for their industries.

There was a slight moderation in business conditions in the September quarter, falling 4 points to +7 index points, driven by a drop in trading conditions and profitability.

However, according to NAB Group Chief Economist Alan Oster, “business conditions are still well above long-run average levels and are consistent with solid rates of activity in the non-mining economy right now. At the same time, confidence levels improved slightly, which suggests to us that firms are still reasonably comfortable about their operating environment, even with the numerous uncertainties emanating from overseas”.

While these outcomes do not differ hugely from the monthly Survey, new information in this survey relates to how firms perceive the outlook facing their business and the economy. According to Mr Oster, “firms’ are telling us that the near-term outlook is still a good one. They don’t anticipate any clear deterioration in business conditions over the next 3-12 months, while hiring intentions for the next year actually picked up markedly and capital expenditure plans remain much stronger than what some other indicators might suggest”.

Other leading indicators are generally still quite good too, although some momentum has been lost. “Capacity utilisation took a step back, unwinding the gains from recent quarters, although the longer term trend is still very much a positive one. That is helping to support investment and employment intentions shown by firms. We have even started to see some signs that firms are finding it a little harder to obtain suitable labour, which could translate into stronger wages growth down the road” said Mr Oster.

However, strong evidence of a more broad based non-mining recovery appeared to stall in Q3. On this, Mr Oster said “the service sectors continue to be the clear outperformers, despite softening a little in Q3. The spread of conditions between the major service industries and the worst performers widened a little in the quarter, in part driven by a concerning deterioration in retail and wholesale conditions. Given the importance of household consumption to the growth outlook, this is something we will continue to monitor closely”.

The Survey is also continuing to show very moderate inflation pressures, which is also working to keep wage pressures contained. Firms expect both their own prices and labour cost growth to remain relatively subdued in the coming quarter.

According to Mr Oster, “the outlook for business activity in this Survey should make the RBA reasonably comfortable, but the inflation picture is less encouraging. However, in light of recent housing market trends, on balance we think a rate cut this year is unlikely, barring an extremely weak Q3 CPI outcome”.

 

Announcements

SEE ALL TOPICS

Related Articles

  • Full Year Results

NAB 2021 Full Year Results

NAB Group Chief Executive Officer Ross McEwan today released NAB’s 2021 Full Year Results and Annual Review.

  • 09.11.2021
  • Time to read 1 min read
  • Announcements

Port of Newcastle Hydrogen Hub

  • 08.11.2021
  • Time to read 1 min read
  • Climate

NAB receives HRH The Prince of Wales’ Terra Carta Seal in recognition of commitment to creating a sustainable future

NAB was awarded the inaugural 2021 Terra Carta Seal by His Royal Highness the Prince of Wales at the UN Climate Change Conference (COP26) in Glasgow.

  • 04.11.2021
  • Time to read 2 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.