MNI 5 Things: Australia NAB Survey Points to Strong Job Gains

--Business Conditions Rises to Record High

By Sophia Rodrigues

     SYDNEY (MNI) - Following are the five things we learned from the National

Australia Bank business survey for February published Tuesday:

     --Business conditions rose 3 points to +21, marking a record high since the

monthly survey started in March 1997. The rise was driven by a big jump in

employment and forward orders. The data supports the Reserve Bank of Australia's

message that the next move in interest rates will likely be up, rather than

down.

     --Employment rose to a record high at +16 points and points to jobs growth

rate of up to 27,000 a month. Interestingly, NAB's employment index had been

pointing to job gains of around 20,000 a month last year when the official data

showed increase of around 33,000. Historically, NAB's employment index has

tended to lead the official data by six months and suggests that the strength in

employment growth will not be ending any time soon.

     --Forward orders rose to +11 points, with particularly large increases in

orders for wholesale, mining, manufacturing and also retail, and finance,

property and business. At current levels, forward orders point to non-mining

demand growth of around 6% but NAB warns this data can be volatile from

month-to-month.

     --Retail remains an underperforming sector with softest business conditions

but the latest month saw the highest reading in eight months. NAB is watching

not just retail but also personal and recreational services which has trended

down in the last four months.

     --The survey showed mixed inflation measures but pointed to subdued outlook

for consumer price index inflation. While purchase cost growth was up to its

highest level in over two years, final product price inflation was unchanged and

retail price growth slowed. Labour cost growth was higher but this was a

reflection of jump in employment rather than wage growth.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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