Australia: Business confidence remains fairly solid in October
November 14, 2017
The business confidence index produced by the National Australia Bank (NAB) came in at 8 points in October, matching September’s revised figure (previously reported: +7). As a result, the series remains above 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, robust business confidence was broad-based, with all sectors in positive territory. Confidence in the retail sector was buoyant in October, which flies in the face of several months of disappointing retail sales figures. A breakdown of the print showed that confidence in mining was the highest of any sector, supported by higher commodity prices. However, the construction sector has grown less optimistic in recent months, likely linked to a cooling of the Sydney housing market and concerns over a possible excess supply of homes. The gap between business conditions, which soared in October, and business confidence accentuated further. Survey data points to pressures on margins and economic uncertainty as possible factors behind this divergence, which, if maintained, could affect investment and employment going forward.
Author: Oliver Reynolds, Economist