AUSTRALIA DATA: NAB Business Survey Points To Another Weak Quarter

November NAB business survey came in weak with conditions down to 2.4 from 7.2, the lowest since end-2019 outside of Covid. Confidence fell to -2.8 from +5.3. There was weakness across components but cost pressures picked up while final product prices remained in line with the historical average. The data is suggesting another soft quarter, but little further progress on inflation. The RBA is widely expected to leave rates at 4.35% later today.

Australia NAB business conditions & outlook

• Labour cost growth remained at 1.4% 3m/3m but purchase costs increased to 1.1% from 0.9% but still below this year’s average. Final product prices rose at 0.6%, unchanged from October, but retail prices eased to 0.6% from 1.1%.
• Capacity utilisation remains above the series average implying that inflation pressures will only come down slowly.
• The RBA has been concerned about services inflation and NAB reported that services conditions were higher. 

Australia NAB price/cost components

Source: MNI - Market News/Refinitiv

• Employment moderated to 2.5 from 3.3 but remains above the low for 2024. November jobs data print Thursday and the unemployment rate is forecast to rise 0.1pp to 4.2%.
• Profitability fell to -0.8 in November from +5.2, the first negative since January 2022. Q3 profits fell again driven by the mining sector and that seems to have continued in Q4 given softer commodity prices. Trading fell to +5.4 from +13, the lowest since pandemic-impacted 2020.
• Forward-looking orders fell to -4.8 from -3.0, but remain in line with the 2024 average. The drop was driven by mining and retail. Exports also deteriorated.