From UBS:
NAB’s survey of business conditions bounced to +0.8 in August (UBS ‘down’, mkt nf) – highest since March – after July fell to a near 3-year low of -3.4 (albeit still below average of +5.3 since 1997). However, business confidence dropped to -2.1 – mostly offsetting a bounce to +3.5 in July (to be well below its +6.2 ave.).
For conditions by sector: mining (+5.8 after +19.4) dropped to a 1½ year low on lower commodity prices. However, there were ‘less negative’ results in manufacturing, construction, and retail. Wholesale and finance & property turned positive. Transport picked up again. Recreation moderated further after strength...
The bounce of business conditions in August is a positive signal – particularly the improvement outside mining. However, this was from a near 3-year low and still below average for Q3. Looking ahead however, the drop back in confidence is somewhat worrying (albeit it has been quite volatile recently). The deterioration in the growth fundamentals – amid lower commodity prices and a slower China, but a high AUD (evident by weaker mining conditions) – also suggests the RBA still has more work to do (UBSe -50bp in Q4).
