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Category: Economic Trends / Retail

NAB business conditions drop, retailing disappoints

Tuesday, 14 Mar 2017 10:05:32 | Thuy Ong

A woman walks past a store displaying sale signs in the Melbourne CBD, June 2012. (AAP: David Crosling, file photo)

Last month's unexpected surge in business conditions has more than unwound in February, driven by deterioration in recreation and personal services, transport, and finance and property services, according to the latest business survey from NAB.

Business confidence in February came in at 7 points, a fall from the 10 points posted in January. Meanwhile business conditions dropped from 16 points in January to 9 in February.

"We saw the big service industries drive the moderation in business conditions this month, but even after pulling-back a little, these industries continue to lead the non-mining recovery," said Alan Oster, chief economist at NAB.

"It is hard to look past the disappointing results from retail, especially given the importance of consumption to the growth outlook."

NAB said the longer term growth picture is concerning, as it noted the contribution from LNG exports, temporarily higher commodity prices and the residential construction boom will fade, placing pressure on the labour market.

"The RBA has made it clear that they are putting increased emphasis on financial stability concerns, which is likely to impact the response of monetary policy," Mr Oster said.

"Conditions are still holding up at levels that would make you reasonably comfortable about the near-term growth prospects for the economy, putting aside some of the concerning trends we are seeing in retail."

Meanwhile, the Reserve Bank has flagged throwing more "sand in the gears" of the housing market, as runaway price rises in Sydney and Melbourne renew bubble fears.

AustraliaPlus


 

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