TheNews

Business confidence in Australia showed a steady if low level of support in January, the latest survey from the National Australia Bank showed on Tuesday with an index score of +2.

AUDUSD M5: 39 pips price movement by NAB Business Confidence news event :



"Financial market volatility has persisted, raising the risk of an adverse impact on Australian business that could threaten the recovery seen in the non-mining economy. However, today’s NAB Monthly Business Survey suggests that business confidence – where the negative effects from financial markets are likely to be felt first – have held up reasonably well in the face of this uncertainty. The confidence index remained unchanged at +2 points in January."

"According to NAB Group Economist Alan Oster, “Given all the volatility in equity and financial markets, this is yet another relatively good result from the Business Survey. It suggests things remain broadly on track for the non-mining economy”.

"Nevertheless, even though confidence remains positive, the index has eased to levels that are below the long-run average. Mr Oster says that “there are competing factors at play here, with reasonably good domestic fundamentals helping to offset what could potentially be a big drag on confidence from global markets”. Estimates from NAB Economics suggest that under normal conditions, domestic fundamentals would suggest a confidence reading that is around 4-5 points higher than current."

"Business conditions have held-up around long-run average levels, however, they have eased notably from the highs of 2015, in large part driven by a sharp deterioration in WA, and to a lesser extent SA. In contrast, business conditions remain much more elevated in NSW and Victoria, although both of these have eased modestly from their recent highs as well."

“Business conditions in mining have deteriorated to an eye watering -47 points, which is having a clear flow on effect to conditions in the major mining states” said Mr Oster. Overall business conditions fell only 1 point to +5 index points in January, equal to the long-run average."

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