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Business confidence sharp jump in December, but retail confidence still “poor”
Australian business confidence improved considerably in December, from -9 in November to 3 last month, after deteriorating to its weakest level since 2009 in November, Nab’s Monthly Business Survey – December confirmed yesterday.
Labour costs rose last month but remained contained, while product price inflation moderated slightly and retail price growth remained soft, up from -0.2 to 0.4, according to the survey.
Confidence improved across all states in December, the Nab survey also found.
Better external sentiment (temporary avoidance of the US ‘fiscal cliff’), strengthening in Chinese data and lower rates have all helped boost business confidence locally, as well as RBA rate cut in December, NAB said yesterday.
However, it may be a reflection of hopes of a better Christmas trading period and further upturn in 2013, as voiced by many retailers that have spoken to Channel News.
The most notable turnaround was in WA and Queensland where unsurprisingly, confidence was strongest and NSW, which may reflect better data out of China pointing to continued commodities demand over the year ahead
However, it most subdued in Victoria and confidence improved solidly in Tasmania.
But despite confidence surge, forward indicators in retail, as well as wholesale and manufacturing remain poor – with poor forward orders; credit demand at record low levels; and capital expenditure at depressed levels, says Nab.
This point to a further slowing in Q1 and Nab are predicting growth of only 2% this year, bad news for retailers hoping 2013 would be see a resurgence after a flat 2012.
Overall, the Nab survey implies underlying demand and GDP growth in the March quarter of around 2.25% and 2.75% respectively – a further slowing in growth from already below trend rates.
However, its not all bad news. Nab also says it expect three rate cuts starting in February.
