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AUD: QBS shows positive outlook for Australian economy - NAB

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 4, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet – Research Team at NAB, notes that their quarterly business survey suggested that the improvement in the non-mining economy remained well entrenched, while the outlook was generally positive as well which translated into better employment outcomes and an improvement in investment intentions.

    Key Quotes

    “The December quarter NAB Business Survey was conducted prior to the recent rout in global financial and commodity markets. Therefore, while the results will not reflect the impact of these events on sentiment (confidence actually rebounded in Q4), it does provide an indication as to how the domestic business environment was shaping at the conclusion of 2015.

    AUD depreciation and low interest rates are assisting the non-mining recovery, although the response from firms to AUD depreciation has generally not been as positive as expected. This largely reflects the offsetting impact from import reliant industries such as wholesale and elements of retail. Nonetheless, services industries, which are making a strong contribution to employment growth, have viewed AUD depreciation more favourably.

    Leading indicators were again relatively positive in Q4 2015. Forward orders remained at quite elevated levels, as did expectations for conditions in 3 and 12 months time. A modest lift in capacity utilisation and capex plans for the next 12 months could be hinting at a much needed lift in non-mining business investment, although high ‘hurdle rates’ of return to investment will remain a challenge.

    Product price inflation remained relatively subdued at an annualised rate of 0.8% (0.2% in the quarter), reflecting both softer purchase costs growth and modest labour cost inflation, as well as a degree of margin compression.”
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