Australian data: Q2 business survey shows conditions eased and forward indicators softened

Business conditions +5 index

• prior +10
• trading conditions and profitability both fell 6pts
• employment index fell 3pts
• forward orders fell 4pts to -6

Business confidence -1

• prior-2

NAB comments:

• “Consistent with our monthly business survey, today’s release shows business conditions eased in Q2 as slow economic growth and soft consumer demand weighed on firms,”

• “At +5, conditions are still slightly above the long-run average for the quarterly survey which dates back to 1989, but nonetheless have now come down some way from their recent highs. Confidence also remained weak.”
• “There was further softening in the forward indicators in the business survey this quarter,”
• “Expectations for future business conditions have weakened, which suggests businesses are becoming more worried about the outlook for the economy even as we have so far managed to avoid a recession.”

More:

• labour costs +1.2% (unchanged from Q1)
• purchase costs +0.9% (from 1.1% in Q1)
• “The story on cost pressures and prices is mixed in this survey,”
• “There appears to be ongoing improvement in materials cost growth which is very welcome, but labour cost growth is still elevated. Labour availability was a significant constraint for 30% of firms and wage costs remain a top concern.”
• “That said there has also been some gradual further easing in price growth, suggesting the slowing demand environment is putting downward pressure on firms’ ability to pass on costs to consumers,”
• “Pressure on margins is also now among the top issues weighing on business confidence.”

Earlier:

• Australian June unemployment rate 4.1% (vs. 4.0% expected)

AUD update:

This article was written by Eamonn Sheridan at www.forexlive.com.