Australian business conditions and confidence improved in June but are still at historically weak levels, according to the latest business survey from the NAB.
At the same time, the latest payrolls and wages data from the Australian Bureau of Statistics revealed that the improvement seen earlier in the year had stopped last month.
Both surveys were taken before the situation worsened in Victoria in the last days of June.
The NAB said business confidence increased by 21 points to 1 point after falling to -65 points in March, but as we have seen in the past that doesn’t mean.
Business conditions increased 17 points but remain negative at -7.
“Forward indicators remain negative and well below average and capacity utilisation remains very low, particularly in recreation and personal services which is at 70% capacity,” the NAB said.
However, retail is above average with a capacity utilisation of about 83%, as we continue to see from results and updates from the likes of JB Hi-Fi and Harvey Norman.
However, the NAB said “it is important to note they (conditions) are still weak in level terms. Business confidence turned positive after rebounding sharply from record lows over the past 3 months.”
“Conditions again increased driven by significant improvements across the trading, profitability and employment sub-components and a broad-based improvement across industries.
“Nonetheless, while the rebound has been significant, conditions remain deeply negative and well below average – reflecting the fact that activity still has some way to go before a full recovery can be declared.
“Unsurprisingly the services sector continues to show the weakest outcomes, but of some concern are construction and manufacturing which also remain weak – pointing to second-round impacts on industries that were not directly impacted by lockdowns.
“Notably, retail has risen to be close to the top of the pack in terms of conditions – a significant turnaround from persistently weak outcomes prior to the current pandemic.
“While there has been a very large and fast rebound in the business survey over the past two months, the survey points to ongoing weakness in the sector which will need to see ongoing support until activity levels and capacity utilisation return to normal,” the NAB’s economists wrote.
Meanwhile, the recovery in the jobs market was slowing before the Victorian Government imposed a second coronavirus lockdown, according to the latest data from the Australian Bureau of Statistics.
There was a 1% drop in payroll jobs nationally for the week ending June 27, while total wages fell 0.7% over the same week (The figures come from the Australian Tax Office payrolls data).
This interrupted a recovery seen in the week ending June 13, where there was no change to payroll jobs and a 0.2% increase in total wages, and the week ending May 30 where there was growth in both measures.
ABS head of labour statistics Bjorn Jarvis said about 35% of payroll jobs initially lost during the pandemic had been regained by the end of June and there had been a significant improvement for young workers.
“By mid-April, job losses for people under 20 were around 23 percent, but by the end of June this had reduced to around 5 per cent,” Mr. Jarvis said in Tuesday’s release.