The recently released NAB monthly business survey to December 2017 reports a strong business sector in Australia at present, with conditions holding steady at well-above average levels and confidence almost catching up this month.
The business confidence index bounced 4pts to +11 index points, the highest level since July 2017, perhaps driven by a stronger global economic backdrop and closes the gap between confidence and business conditions.
Business confidence is strongest in trend terms in Queensland and SA and to a lesser extent NSW. Confidence is also reasonable in WA, and is in line with business conditions in the state. Victoria and Tasmania meanwhile are reporting levels of confidence which are lower than their reported level business conditions.
Mining and construction are the most confident, with the latter picking up in recent months after trending down between July and October, suggesting that a positive outlook for non-residential construction may be offsetting any concerns around apartment oversupply and a slowdown in the Sydney housing market. In contrast, retail confidence is surprisingly strong, and well above reported conditions. The retail industry has been a consistent underperformerin the NAB Business Survey, and is the only industryreporting negative business conditions.
The employment index pulled back a little in December, and while it remains consistent with a solid rate of job creation, it does suggest employment growth may ease back from current extraordinary heights.
But whether this will begin to lift wages growth is another question, with labour costs rising.
