The business surveys are giving a bit of a bum-steer on the economy (although they remain important). The problem is that all of the growth in the economy is coming from a small minority of companies. So when you do a survey of all businesses, you are getting artificially negative results. The RBA raised this complication in a Bulletin paper some time ago (subtly). It is a pretty obvious issue. Think about it: 20% of the economy is roaring while 80% is growing below-trend. If you poll this sample, you are going to conclude that the economy is weak. UBS report:
NAB’s survey of business conditions dropped further in May to -3.5 (UBS ‘down’, mkt nf) – the lowest since May-09 – from -0.1 in April and a decent +2.6 in March, to well below average (+5.5 since 1997). Further, business confidence slumped to -2.2 – the weakest since Aug-11 and 2nd lowest since the GFC (to also be well below its +6.3 average) – from a one-year high of +4.1 in April. For conditions by sector: mining collapsed back, manufacturing and retail stayed negative, construction plunged deeper into contraction, wholesale bounced to flat and transport rebounded to positive. Recreation moderated after strength.
