Australian Business Conditions Continue Declining in July

Business conditions have slipped again in July across most Australian industries, continuing the downward trend starting in April.

The NAB’s monthly business survey revealed that conditions fell in the mining, manufacturing, retail and finance sectors. “The retail sector remains clearly the weakest, declining again in the month to see the retail conditions index fall to 0 points,” said NAB chief economist Alan Oster.

Construction became one of the few industries to have a “sharp” increase in conditions, which Oster said likely came from “the large pipeline of both residential and infrastructure-related work”.

Measures of trading and profitability also dipped in July, with the latter falling five points to +10.

However, business confidence remained relatively consistent, rising one point to +7. Employment index also rose five points to +10. “The employment index – based on historical patterns – is consistent with jobs growth of around 23,000 per month, which should see the unemployment rate continue to edge lower over the rest of 2018,” said Oster.

Mining industry had the highest employment index, followed by finance, business and property services and construction.

“Overall, the survey results are broadly in line with our outlook for the economy for the rest of 2018,” said Oster.

“The business sector looks relatively healthy, and we expect to see enough employment growth to see a gradual reduction in spare capacity, which should in time see a rise in wage growth, and a more general lift in inflation.”

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