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Australia: Partial recovery in Sept NAB business confidence

FXStreet (Bali) - There has been a partial recovery in business confidence in Australia, with the NAB business confidence coming at 5 in September vs 1 in August, while business conditions were unchanged at 9.

Key comments - NAB

"There was a partial recovery in business confidence in September as the Government’s leadership uncertainties were resolved, while financial market volatility and emerging market concerns have moderated from the heights of the previous month – although market concerns remain elevated. The business confidence index rose 4 points, to +5, which more than unwound last month’s decline, but is still well below the mid-year peak. Additionally, the improvement in confidence was not broad-based across industries, falling in mining, construction and finance."

"Business conditions held steady at an above average +9 index points in September. By component, employment is finally improving, turning positive and increasing to its highest level since mid-2011. In contrast, both trading conditions and profitability eased back, although they remain at elevated levels. Services sectors continue to outperform, while mining and manufacturing were the only industries to report negative business conditions in September – although there was a notable deterioration in both retail and finance/ property/ business services. Leading indicators have been positive, although forward orders eased slightly in the month. Capacity utilisation has been trending higher, which augurs well for non-mining business investment and the labour market."

"Overall, the business survey suggest a good degree of resilience in what appears to be a building non-mining sector recovery. This is particularly apparent in industries thought to be highly responsive to currency changes in the near-term, including personal and business services. Weak commodity prices and falling mining investment will remain a drag on economic activity and downside risks from offshore remain pronounced. However, we find it difficult to mount a case for further policy easing on purely domestic grounds and view market pricing for another 25bp cut over the coming 6 months as overly pessimistic."

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