Further evidence that the Australian economy is drifting towards a slow down or even recession – despite the continuing growth in the labour force.
The final National Australia Bank monthly business survey of 2019, released yesterday, provided further evidence that activity may have stabilised in the final quarter of the year, but at very low levels.
So much so that the outlook for 2020 is weak (especially compared to the more upbeat views a year ago for 2019 which failed to eventuate).
And there’s no impact yet from the bushfires, or from China’s coronavirus crisis (much too early) which saw the local market slide 96 points or 1.4% and the Aussie dollar sell off to well under 68 US cents.
The NAB survey revealed that business conditions edged 1pt lower in the month to +3 index points – another below-average result and well below the level seen in early 2018.
And the NAB said business confidence weakened, falling 2pts to -2 index points, the lowest read since mid-2013.
The NAB said in a commentary on the survey “While broadly stable, forward-looking indicators do not imply a material improvement in the near term. Forward orders remain weak and capacity utilisation is just below average.
“Capex (investment) has pulled back over the year, and is now also below average.
As the December labour force data last Thursday revealed the NAB said one bright spot is the employment index, which at +4 index points is above average and implies reasonable ongoing employment demand.
While the deterioration in conditions since mid-2018 has been broad-based, NSW and Vic currently see the best conditions on the mainland, as do the service industries.
Retailing – the most depressed sector in 2019, seems to have improved slightly over recent months, but the NAB reckons it “ remains deeply in negative territory and, alongside wholesale, the weakest of all industries.”
“Notwithstanding the decline in confidence, the impact of the bushfires (which began in late December) is not yet apparent in these results. We will closely watch the results of the January survey for any indication of the impact of the fires on the business sector,” the NAB said yesterday.
So worse to come and it’s already here according to the spate of profit downgrades and commentaries about early trading in 2020.