Business Sector Still Under Pressure

11th of August, 2019

Yesterday’s monthly business survey suggests businesses are still doing it tough despite recent rate cuts and a more stable domestic political environment.

The NAB august business survey results out yesterday saw falls to both business confidence and conditions. These two components both printed at 1 for august which represent a 3pt and 2pt drop respectively. There is now speculation that the global risk factors to the outlook are having some effects on business and consumer investment decisions in the local economy.

However an important factor for the outlook, the employment component of the survey, rose 2pts this last month from its zero reading in July. Whilst that is positive it is somewhat contradictory that the survey reading for employment should rise when forward orders, trading conditions and profitability all fell. It isn’t logical that businesses would be looking to employ more staff when their outlook is deteriorating, according to the survey.

With the second major bank survey for the week out later today, it will be interesting to see if the expected stimulatory effect of the tax and rate cuts will be seen in the Westpac Consumer confidence number that rose in august back to its 100 level.

Matthew Dunshea

Client Relationship Manager