Australia's May NAB business survey points at upbeat business sector

Australia's NAB business confidence for the month of May came in at 7 vs 13 last, while business conditions stood at 12 vs 13 last, which according to NAB, pointed to an upbeat business sector.

NAB Monthly Business Survey - May 2017

The May NAB Monthly Business Survey again pointed to an upbeat business sector, indicating an apparent disconnect with a seemingly disheartened household sector.

Despite easing modestly in May, business conditions are still at very elevated levels, while solid trends across most states and industries are encouraging.

Employment conditions are holding up well and are consistent with the recent improvements in employment growth reported by the ABS and suggests that we can expect solid employment growth to continue over coming months.

Business confidence meanwhile unwound, after briefly caught up with conditions in April, although remains above its long run average. How the disparity between business and household conditions resolves itself will be critical to the outlook for growth.

We continue to expect economic growth to accelerate in H2 2017, following weather related disruptions in the first half of the year, but the longer-term outlook is less certain as important growth drivers (LNG exports, commodity prices and housing construction) begin to fade.

Despite that, the RBA’s emphasis on financial stability concerns is expected to keep them on hold for the foreseeable future. Updated economic forecasts will be released tomorrow.