NAB Business Survey Signals Demand Resilience And Solid Outlook

In contrast to consumer sentiment, business confidence and conditions remain robust as demand has proved resilient on strong population growth and easing global growth concerns. NAB business conditions in January rose to 18 from an upwardly revised 13 while confidence rose again to around average at 6 from 0.1 in December and -4 in November. All of the price and cost components of the survey rose in January but remain well below 2022 peaks. The latest NAB survey affirms demand remains robust and that more rate hikes are coming.

• Again in contrast to depressed consumer confidence, consumer-related sectors remained strong in the NAB survey.
• The improvement in business conditions was driven by the trading environment (+8pts), while employment (+2 pts) and profitability (+3 pts) remained well above average. In terms of the outlook, forward orders improved 3 points in January and capacity utilisation to 85.7% from 83.8%. But the export component deteriorated again to -1.5 from -0.9 and both it and exporters’ sales are below average.
• Cost and price pressures stopped improving last month but remain below their mid-2022 peak and suggest that inflation may have peaked in Q4. Labour costs rose to 2.7% from 2.1% but below November’s 2.9%. Retail prices rose to 2.7% from 2.3%.