Australia: Business confidence dips in November
December 12, 2017
The business confidence index produced by the National Australia Bank (NAB) came in at 6 points in November, down from October’s revised 9 points (previously reported: +8 points). Despite the pullback, the series still remains at around its long-run average, and sits above the neutral 0-point threshold, which indicates that Australian businesses are largely optimistic regarding economic conditions in the coming months.
According to the NAB, although all sub-sectors remain broadly positive, November’s moderation was driven by lower confidence in the manufacturing, transport and construction sectors. Lower confidence in the construction industry is likely linked to the cooling housing market, particularly in Sydney, where house prices have fallen in recent months. A breakdown of the print showed that confidence in mining was the highest of any sector, supported by higher commodity prices, while confidence is lowest in the personal services sector. Top of the list of firms’ concerns is the outlook for their business, possibly driven by recent political uncertainty. In addition, companies are also worried about pressures on margins, while wage costs have recently become a much bigger bugbear.
Author: Oliver Reynolds, Economist