Daily Commentary BY THE CURVE TEAM –

Businesses Welcome Covid Improvements

9th of December, 2020

NAB’s Business Survey shows businesses continue to be buoyed by positive Covid news.

Business confidence for November lifted from 3 to 12, led by gains in NSW and Victoria. Conditions improved from 2 to 9, with Victoria recording only marginal improvements.

With Victoria lagging other states in terms of conditions and the virus very well contained currently, Victorian conditions should provide an immediate upside over the next month at least.

Mining and construction remain the laggard industries. Confidence in mining is low relative to other industries and conditions for construction low relative to other industries.

The employment index remains a concern, unmoved at -5. This shows that despite the outlook being largely improved following the containment of the virus and positive vaccine news, it will take time for this to flow through to broader economic activity.

ANZ job ads released on Monday showed more promising news for employment. Ads were up 13.9% for November following an 11.9% rise in October. It leaves ads 4.7% lower than February levels.

Residential house prices were up 0.8% for Q3, leaving them 4.5% for the year. This comes as many analysts predict big rises early next year as monetary policy remains very accommodating and the economy recovers.

Already in New Zealand, the regulators have tightened lending standards following a 20% increase in the median property price over the last year. Australia’s housing prices alongside debt will continue to be monitored closely by the RBA and APRA.

Josh Stewart

Associate - Money Markets