Australia: Business conditions off high in May, confidence slips - Westpac

Andrew Hanlan, Research Analyst at Westpac, notes that in May, Australian business conditions were elevated, albeit off the highs of last month, while business confidence slipped the NAB business survey reports.

Key Quotes

“The business conditions index declined by 6pts to +15, a reading well above average.”

“Looking through the month to month volatility, business conditions trended higher through 2017 and have remained at high levels in 2018. The index averaged +10 in 2016, lifted to +13 over 2017 H1 and has averaged +18 from October 2017.”

“This is consistent with the strengthening of domestic demand over this period, although overstating the pace of demand growth.”

“Business confidence also declined in May, down 5pts to +6, a reading in line with the historic average.”

“The May update on confidence was on the softer side, representing the lowest level since the end of 2016. Confidence may have been dented by global and domestic developments, including: uncertainty around global trade; rising global energy costs (a plus for mining but a negative for transport and other sectors); a cooling housing market and potential spill-over effects (it is noticeable that confidence has slipped in NSW but improved in WA).”