Business confidence & conditions still favourable despite drop

by John Maguire04 May 2016
Business confidence and conditions have deteriorated in April, according to NAB, negating some significant gains in the previous month. However, the business environment is generally “highly favourable” for companies, says the major bank.

The latest NAB monthly survey shows that business conditions fell to +9 index points, a fall of three points. However, conditions remain above the long-run average of +5 points. Business confidence, meanwhile fell one index point to +5, slightly below the long-run average.

NAB chief economist Alan Oster was generally positive about the figures.

“Even though business conditions eased this month, they have remained well above average levels for the past year,” said Oster. “With consistently good results like these from our survey it is difficult not to have a degree of confidence in the near-term outlook."

Oster added that the diminished numbers for the business confidence index was still a “reasonable outcome” in the context of an economic climate affected by uncertainty as both the Federal Budget and RBA board meeting approached, as well as the upcoming federal election.
Other results from the NAB survey showed that trade and profitability both eased in April, but remain generally in good shape. Employment sustained the gains it had made in the previous month, which NAB interpreted as resilience in the labour market.

“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 all reassuring,” said Oster.