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Business Confidence Pointing To Slowdown Ahead, Costs Elevated


The November NAB business survey showed that the economy remains robust in Q4 but that it is not only expected to weaken but the trend in orders is suggesting that it is imminent. Business conditions remained elevated but fell 2 points to 20. Business confidence, a leading indicator, deteriorated into negative territory at -4 for the first time since December 2021 as monetary tightening and the deteriorating global growth outlook weigh on sentiment.

  • Forward orders fell a further 3 points to 5, the lowest since September 2021, and well off the peak of 15 in May. This series suggests that demand is beginning to slow.
  • Cost measures in the survey were fairly stable but at elevated rates, which is likely to concern the RBA. Retail prices rose to their highest in three months at 2.9%. Labour costs were 3.0% (Oct 2.8%) and purchase costs 3.9% (Oct 4.1%). The price of final products is also high but off its peak.
  • Employment conditions fell 1 point and point to normalising but still robust job growth.
  • The fall in confidence was driven by manufacturing, construction and retail. It was also down across the states, except in SA.
  • See NAB report here.
Australia NAB business confidence vs GDP y/y%

Source: MNI - Market News/Refinitiv/NAB

Australia NAB price of final products vs CPI y/y%

Source: MNI - Market News/Refinitiv/NAB

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