FXStreet (Delhi) – Research Team at NAB, notes that the NAB Business Survey suggested a slight easing in Australian business conditions in December, but showed little signs (beyond normal monthly volatility) of a fundamental weakening in the non-mining recovery. Key Quotes “Business conditions eased back to (still above average) +7 index points in December (from +10), as sales, profitability and employment all took a step back. Employment conditions eased back to neutral – a reading consistent with modest employment growth but counter to the (well) above trend employment growth reported in the official statistics. Service sectors remain the best performers, although it was disappointing to see a sharp moderation in retail conditions, while very weak construction could point beyond the mining downturn to suggest that the peak in the residential construction cycle may be fast approaching. Capacity utilisation – a useful measure of the underlying health of the economy –eased significantly this month, which, if maintained, could pose a hurdle for future business investment. That said the trend still remains reasonably positive. Also on the positive side, forward orders lifted this month, indicative of a potential pick up in activity in the near term. Business confidence remains positive, despite pulling back on escalating concerns over the global economic outlook (particularly in China) and big declines in oil and equity markets since the start of the year. While these market moves highlight potential risks, relatively positive business conditions appear to have, so far, acted to reassure business sentiment. Global equity markets were down around 10% from the time of the previous monthly survey reading. Domestic factors may also be at play, with the largest declines in confidence concentrated in the construction sector – consistent with falling mining investment and moderating housing markets. Recent financial market turmoil certainly highlights the risks to the outlook, but has not fundamentally changed our view of the Australian economy. Business conditions remain well above average in fundamental (trend) terms, and business confidence has been surprisingly robust in the current financial environment. Positive business conditions in most industries suggest a relatively broad based recovery in the non-mining sector is underway (services leading the way), although the deterioration in construction will be monitored closely. Given our underlying expectation for the non-mining recovery to remain on track, monetary policy is expected to remain on hold for an extended period.” For more information, read our latest forex news.