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Transport remains strong despite slowing business conditions

  • Posted on Wednesday 13th, February 2019.

Business conditions continued to ease in Q4 2018 but the latest National Australia Bank (NAB) Quarterly Business Survey indicates that conditions deteriorated in most industries except wholesale and transport & utilities.

NAB Group Chief Economist, Alan Oster, said forward orders have declined to below average levels, and while capacity utilisation remains high, firm’s expectations for capital expenditure over this year have declined.

"Businesses’ own expectations for conditions and employment over the next three and 12 months also suggest a further pull-back," he said.

"In addition, business confidence has now tracked below average for half a year.

“Over the year, the easing in conditions has been broad-based across most industries. Of particular note has been the weakness in retail, which continues to report deteriorating conditions. Our survey is from the business perspective, but this trend is in line with other consumer side indicators such as retail sales and consumer confidence in the December quarter."

The Survey states that over the past six months, the expectations of wage pressures have increased across all industries except retail and transport.

NAB said surveyed Labour market indicators suggest ongoing strength in the labour market but that the pace of employment growth is slowing. While the reported difficulty in finding suitable labour edged higher in the quarter, this suggests that higher wage growth may be on the horizon.

“For now the survey reflects ongoing employment growth, at a magnitude that should see recent labour market gains maintained, but becoming more gradual," said Oster.

"The recent fall in the unemployment rate has been reflected in a slight further tightening in the labour market with the share of firms reporting greater difficulty in sourcing suitable labour increasing in the quarter. Our special question on expected wage pressures also suggests wage growth will continue to rise, but only slowly," he said.

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