National Australia Bank's monthly Business Survey

Business conditions for May, ease back a little from a very strong April, comes in at 12

  • prior was 13, revised from 14
  • long-run average of conditions is +5

Business confidence for May, dumps hard this month down to 7

  • prior was 13
  • long-run average of +6

From NAB (bolding mine):

  • Business conditions eased slightly in May, but are holding up at elevated levels
  • Business confidence is looking less buoyant, although it has remained above long-run average levels
  • Slight moderation in business conditions during May was largely driven by construction and finance/ property/ business services, but all industries are recording positive business conditions - for only the second time since 2010
  • The mining industry has bounced back considerably in recent months, supported by elevated commodity prices.
  • Other leading indicators were generally encouraging, with the capacity utilisation rate rising, despite some pull-back in capital expenditure, while forward orders were steady in positive territory for the month

Alan Oster, NAB's Chief economist:

  • "The business sector is looking quite upbeat, maintaining the apparent disconnect with a rather melancholy household sector... the strength has been quite broad-based ... improvements in Western Australia, which signals that the worst of the mining sector drag is probably behind us".
  • "The one patch of softness is in retail, where conditions were only neutral in trend terms, although that is unsurprising given the softer trends in the household sector. The major service industries on the other hand are still generally leading the way, although the gap is clearly closing as the underperformers lift"
  • "the current level of employment conditions is consistent with the recent improvements in ABS employment growth. That has helped to close the previous departure between the NAB and ABS measures of employment, while the NAB index suggests that we can expect more solid employment growth to continue over coming months"

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An upbeat take on the report. Yes, the conditions index is strong, but the steep fall in confidence seems to have not been focused on in analysis and comments. The 'conditions' side of the survey is more objective than the sentiment-driven 'confidence', but still it's a bit of a pause for thought.

AUD is pretty much net unchanged on the data. Updates: