NAB business survey shows confidence was weak over January

NAB’s Business Survey released yesterday showed less than positive results, stating that Australia’s economy was “soft” and confidence was “weakish” over January.

NAB said in a statement that business conditions were a touch softer than December. “In January, sales deteriorated considerably, profits eased and employment remained soft. Thus business conditions are increasingly below long-run average.”

However, the results were in contrast to Roy Morgan’s latest business confidence survey which showed Australian businesses were entering 2015 with a more optimistic outlook than previous years, with business confidence up 8.3% in January.

While NAB’s survey showed confidence across industries was mixed, the mining industry in particular remained “very weak”. By contrast the retail industry saw a “surprising” improvement.

NAB said that the Reserve Bank of Australia’s decision to cut the official cash rate from 2.5% down to 2.25% came a month sooner than expected and predicted the board is likely to sit back and watch for the next few months until they make their next decision, regarding which way the rate should go.

NAB stated that fundamentally Australia still needs to see another cut to “counter lower commodity prices and other domestic headwinds.”

“We have brought forward our August cut to May – with a 30% probability of another cut thereafter. The timing and extent of the cuts will be heavily data dependent while a resurgent housing market would work in the opposite direction.”