NAB Business Survey

Andrew Pegler – 30 April 2010

This week I thought we’d check out the latest quarterly NAB Business Confidence Survey to see how the patient is faring.

While business confidence eased a tad over the quarter it remains pretty upbeat. And it should come as no surprise that the happiest campers are our diggers and drillers who look like getting better contract prices for our dirt than they expected. Nice one.

As for state rivalry, well the Melbourne Storm may be up the creek without a paddle but Victoria is paddling with a nice current into the fjords of good times. Queensland, however, remains as sluggish a croc that just lunched on cane toad. The culprit? The high Aussie dollar sucking the life out of tourism. Not so perfect one day?

Plans by business to spend up on capital over the next 12 months shifted up slightly and capacity utilisation (how much companies are using their machines and capital to make things) edged up 0.1% to 81.4%. A capital outcome to be sure!

But it’s not all good news. Since January retailing and wholesaling have gone south and the end of the first home owner’s grant has seen construction do the same. And there’s a few costs pressures re-emerging. Retail price inflation continues to drift down thanks to the muscling AUD and firms reporting labour shortages remains only modestly above the low point in mid-2009. A little wobbly but still shining?

Probably the NAB’s boldest prediction – $AUD parity with the $USD in mid-2010. Good news for exporters, another nail in the coffin for manufacturers and tourism operators. Meanwhile core or “underlying” inflation (the inflation measurement that tries to identify inflation trends by removing volatile things like food, petrol and interest rates) is expected to be 2.5% by end 2010, and 2.75% by end 2011. FYI “headline” inflation, which includes everything, is what the media focuses on.

So overall the patient is recovering well. Now, fetch me my golf clubs please nurse.

And in other news… ANZ has announced a half-year statutory profit of $1.9 billion up 36% on last year. As they say there’s only one thing worse than banks making money hand over fist and that’s them losing it. CEO Mike Smith also took the opportunity to describe Europe as a “mess” claiming contagion is now a very real issue. Personally I’m on Portugal watch.