The Australian, May 8, 2017
The Australian economy showed positive signals of growth in April, with worries over the state of Queensland easing in the aftermath of Cyclone Debbie.
The NAB Monthly Business Survey revealed the business conditions index rose two points to a nine-year high of +8, well above the +5 long run average, while business confidence surged by seven points to a seven-year high of +13.
NAB chief economist Alan Oster said this most recent rise in the conditions index was largely due to this better-than-expected resilience of the Queensland economy following Cyclone Debbie, as well as a uniform pick-up across major industries, with services in particular leading the charge.
Concerns still remain over the retail sector, despite a pick-up over the month, however mining activity shows positive signs of improvement in the face of a lower April read.
“Industry trends remain positive overall, supported by elevated commodity prices, but conditions did drop back in April,” said Mr Oyster.
According to the survey, employment data were the prominent driver behind most of the improvement in conditions considering profitability remained steady.
“The recent improvement in employment growth reported by the ABS helped reduce the gap that had emerged with NAB’s employment conditions index over a number of months,” said Mr Oster.
“The survey points to an ongoing improvement in employment conditions, which is a trend that is critical to the likely path of the RBA’s cash rate”
As such, NAB’s outlook for the economy remains upbeat, with a few notable exceptions in the sights of policymakers.
“The longer-term economic outlook is somewhat less certain, however, as important growth drivers, such as LNG exports, commodity prices and housing construction, begins to fade.
“Despite that, the RBA’s emphasis on financial stability concerns are expected to keep them on hold for the foreseeable future”.