Adam Boyton, Chief Economist at Deutsche Bank, suggests that their tracking of six separate data series, shows a clear turn lower across interest sensitive parts of the economy. Key Quotes “Given it has now been almost 12 months since the most recent RBA rate cut, some softening in yearly growth in housing finance and retail sales does seem about ‘right’. At the same time, however, the NAB business survey is reporting robust conditions. Our interest sensitive tracker can lead business conditions from the NAB survey by around six months. This raises the risk that the business conditions index from the NAB survey could trend lower over the second half of 2016. That said, we also see some likelihood that the current weakness in our interest sensitive tracker is over-stated, with recent trends in auction clearance rates suggesting ‘better’ (albeit still subdued) outturns for house prices, housing finance growth and potentially retail sales. Even taking that into account, we would not be surprised if the NAB survey softened somewhat from current levels. Interestingly, most of the monthly data releases from the Australian Bureau of Statistics are heavily skewed toward the interest sensitive sectors. Indeed of the five key monthly data releases from the ABS, three cover the interest sensitive sector (housing finance, retail sales and building approvals), one covers the external sector (international trade in goods and services) and one covers the labour force (and hence, the entire economy). To the extent that other sectors of the economy fill the bulk of the gap left by less growth in the interest sensitive sectors, too much of a focus on the monthly data releases from the ABS may leave one with too downbeat a view on the Australian economy.” For more information, read our latest forex news.