NAB Survey Signals Stall In Hiring, Price/Cost Pressures Ease

NAB June business confidence rose to +4 from -2, its highest in 18 months, but conditions fell 2 points to +4, the lowest since January 2022 and below the series average. Conditions are showing a deteriorating economy with all components falling in June, especially employment, but maybe businesses are feeling more positive about the outlook although confidence has been volatile. The easing in the price/cost components was good news after the pickup in May.

• NAB interprets the survey as signaling that Q2 was another weak quarter, in line with expectations generally.
• The price of final products rose 0.7% 3m/3m, the lowest since February 2021 and only slightly above the historical average. The Q2 average eased to 0.9% from 1.1%, signaling a possible further moderation in Q2 CPI inflation.

Source: MNI - Market News/Refinitiv

• Purchase costs rose 1.3%, also only slightly higher than average, but labour costs at 1.8% are still well above average although down from May’s 2.3%. Retail price inflation picked up to 1.5% from 1.4% and 1% in April, which is surprising given the weakness in consumption.
• Labour demand fell 5 points to -0.3 signalling a stall in hiring, which we’re likely to see reflected in a pickup in the unemployment rate as labour supply growth remains robust.
• The forward-looking orders component remains pessimistic at -6.3 and well below the +0.8 series average. Exports are moderately negative too.

Source: MNI - Market News/Refinitiv