Australia: Leading indicators mostly improved in Q1 2017 - NAB
|Australia's business confidence improved slightly in Q1 2017, coming in at 6 vs 5 last, while conditions rose 2 points, to +8 index points, which is well above the long-run average, the National Australian Bank (NAB) reported on Thursday.
Key Quotes - NAB
The NAB Quarterly Business Survey generally paints an encouraging picture of both current business activity and the outlook. Leading indicators mostly improved in Q1 2017, which has been reflected in better outcomes in terms of investment and hiring intentions going forward. Both near and longer-term employment expectations recorded solid improvements and a greater proportion of firms a reporting difficulties finding suitable labour.
Meanwhile, capex plans for the next 12 months hit their highest level since mid-2011, consistent with a rebound in capacity utilisation rates this quarter. The mining industry is showing more signs of turning a corner with a strong bounce in mining conditions and elevated confidence levels.
Meanwhile, retail trends are still a concern despite showing some improvement in the quarter. The Survey’s read on inflation remains very subdued and points to an absence of wage pressures.
According to Mr Alan Oster, NAB’s Chief economist, “leading indicators were more encouraging across the board in the March quarter, with firms telling us that the near-term outlook is looking even more upbeat. Their expectations for business conditions in both the near and longer term improved noticeably in the quarter, while a similar trend could be seen in both their hiring and capital expenditure intentions.”
“These results suggest solid rates of business activity in the near term, although do not include likely disruptions from Cyclone Debbie, while the leading indicators point to even better outcomes in the next 12 months. However, we continue to anticipate some significant headwinds from 2018 as LNG exports and the housing construction cycle peak. That, combined with the lack of inflationary pressures in the Survey suggests the RBA will remain on the sidelines for an extended period, ”Mr Oster added.
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