FXStreet (Bali) – Business conditions in Australia improves during the August period, to 11 from 6 in July, while business confidence receded further, coming at 1 vs 4 in July.
James Glenn, Senior Economist at NAB
“Business conditions point to a further improvement in the non-mining economy, even as jitters in financial markets weigh on confidence. The conditions index jumped 5 points to +11 in August, after losing a little ground last month, lifting the trend index to its highest level since late 2009. By component, both trading conditions and profitability recorded a notable improvement, but the employment index remains at very subdued levels.
“This outcome adds to the mounting evidence that AUD depreciation and record low interest rates are having the desired effect and helping to offset the weakness in mining. Even so, outcomes vary significantly by industry. Services sectors continue to outperform, while retail has improved considerably. The ‘bellwether’ wholesale industry remains weak, but probably reflects margin squeeze due to AUD depreciation as other leading indicators (aggregate forward orders and capacity utilisation) have improved.”
“Confidence pared back further in August (from +4 to +1), unwinding the post budget gains and hitting its lowest level since mid-2013. While confidence tends to track conditions quite closely, recent financial market ructions and China growth concerns appear to have had an unnerving effect on business – albeit not enough to send confidence into negative territory (a good outcome given the degree of market volatility). Confidence eased in most industries, although mining and construction recovered some of last month’s sharp declines.”
(Market News Provided by FXstreet)