National Australia Bank business survey for January 2016

Preview here on the background to this for today. I'm biased, of course, but I reckon that preview is worth a read to put today's results into proper perspective

Business conditions: 5

  • prior 6, revised from 7

Business Confidence 2

  • prior 2, revised from 3

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Quick glance...

  • The NAB Business Survey suggests some easing in conditions and (less so) confidence recently
  • Not (yet) showing a negative impact on the non-mining sectors from recent financial market volatility and falling equity markets
  • However, the longer these uncertainties continue, the higher the risk that it will do so

NAB say that for now, the Survey suggests there no fundamental change in our view of the Australian economy, with the recovery in the non-mining economy still strong

  • Business confidence is sub-trend ... But holding up reasonably well in the face of financial turmoil
  • Business conditions eased, but still consistent with non-mining recovery, and have held-up around long-run average levels

Comments from NAB Group Economist Alan Oster:

  • "Given all the volatility in equity and financial markets, this is yet another relatively good result from the Business Survey. It suggests things remain broadly on track for the non-mining economy"
  • "there are competing factors at play here, with reasonably good domestic fundamentals helping to offset what could potentially be a big drag on confidence from global markets"
  • "Business conditions in mining have deteriorated to an eye watering -47 points, which is having a clear flow on effect to conditions in the major mining states"
  • "... fundamental conditions in the non-mining economy remain very resilient, and we have not changed our view of the Australian economy"

More:

  • Outside of the mining industry, conditions are relatively mixed
  • Much of the deterioration in January has come from wholesale, possibly reflecting AUD depreciation
  • Retail has also exhibited some unexpected weakness
  • The transport industry appears to be seeing the benefits of lower oil prices
  • Major services industries remain the clear outperformers
  • International risks have tilted to the downside

NAB's RBA outlook:

  • Expects the RBA will remain on the sidelines and observe developments, while continuing to focus on signals relating to non-mining economic activity. Today's survey suggests the RBA still has sufficient breathing room.