MNI ANALYSIS: Australia Biz Survey Shows Weak Infla Pressures

--NAB Says Mining In Mini-Boom But Retail Lags

By Sophia Rodrigues

     SYDNEY (MNI) - The National Australia Bank's business survey for June

showed continued elevated levels of confidence and conditions but no sign yet of

a pick-up in inflationary measures.

     All key inflationary measures like purchase price, final products prices,

labor costs and retail prices edged lower in June. Added to this was a drop in

employment sub-index, though the current level is still consistent with jobs

growth of around 20,000 a month. Still it may not be sufficient to push the

jobless rate gradually lower especially if there is an increase in labor

participation.

     The data puts focus on consumer price index inflation for second quarter

due in around two weeks time where a soft outcome would mean the Reserve Bank of

Australia's monetary policy could remain on hold for longer.

     Data published by NAB Tuesday showed business conditions rose to +15 in

June from +14 in May while confidence eased to +6 from +7. Confidence was around

average level and conditions remained above average.

     The data showed conditions was the highest in mining and the weakest in

retail. NAB economists characterize the mining industry as being in a mini-boom

with highest level of capacity utilization since early 2012, rise in capex

expectations and increase in employment growth. The sector in seeing an

emergence of cost pressures mainly from the employment side as it faces

competition from construction related employment in large public and private

infrastructure projects.

     On the other hand, retail remains a laggard with prices turning flat in

quarterly terms compared with +0.2% in the May survey.

     Below is the table from the survey:

                                          June   May

----------------------------------------------------

Business Confidence                         +6    +7

Business Conditions                        +15   +14

Employment                                  +5    +9

Profitability                              +13   +13

Trading                                    +23   +20

Exports                                      0    +1

Forward Orders                              +2    +4

Stocks                                      +4    +7

Retail Prices (quarterly rate %)           0.0  +0.2

Labor costs (quarterly rate %)            +0.8  +1.0

Final products prices (quarterly rate %)  +0.4  +0.5

Capacity Utilization (%)                  82.4  82.0

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

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