Australia: NAB businesses upbeat; housing trough? - TDS

Analysts at NAB note that Australia’s June NAB business confidence (+9) and conditions (+15) jumped to highs not seen since the original commodity-price boom of 2007.

Key Quotes

“This surge in broader-economy sentiment has now caught up with the 2017 acceleration in the manufacturing PMI.”

“Employment, profits, trading conditions and investment are all expanding. The pickup in survey investment is not yet reflected in non-mining investment, and so the waiting game continues. The RBA, in contrast, in recent Board statements claims that “Business investment has picked up in those parts of the country not directly affected by the decline in mining investment”. Perhaps the next GDP report?”

“Consumer sentiment, and spending, continue to weigh on the economy. The prior sentiment index was under-neutral 96.2 and the July update is tomorrow. With employment so buoyant a pickup is likely, but a lack of political leadership makes looking ahead to a brighter future somewhat difficult.”

“We also note the pickup in housing finance for new activity, hinting that the decline in building approvals may soon be over. In addition, activity is skewed towards owner-occupiers (+2.9%) and away from investors (-1.4%) as APRA intended. AUD rallied briefly on the data, outperforming the NZD, the latter weighed down by a lacklustre June consumer credit spending report.”