NAB Survey cools
Paul Keating was back in the news this week, albeit for somewhat different reasons, but I imagine he'd have enjoyed reading today's NAB Survey, which pointed to a cooling economy, and most likely falling inflation ahead.
Tomorrow's Budget is likely to take further pressures off the consumer price index, with cost of living relief measures reportedly set to be announced for energy and rents (even if this doesn't help to cool inflation for some time, it should mechanically reduce consumer prices).
The NAB Survey for the month of April 2024 showed business conditions falling further from a reading of 10 to 7 over the past two months, while business confidence is very low at a reading of just 1.
That's perhaps not too surprising given the extremely weak forward orders index at minus 7!
Importantly, all of the readings for prices - labour, purchase, products and retail - were declining from February and March through April, potentially pointing to slower inflation ahead.
Source; NAB Survey
The jobs gauge from the NAB survey has also fallen to the lowest level in 27 months, as neatly charted by CommSec:
Source: CommSec
Separately, Commonwealth Bank's spending trackers have turned "deeply negative" in volume terms per capita:
Source: Commonwealth Bank of Australia
With many borrowers discovering that their mortgage repayments have suddenly doubled over recent months, it's always felt like the risks to the Aussie economy would lie to the downside, as countries like New Zealand and Germany are now discovering to their cost.
Nonetheless, these figures will extract something of a sigh of relief from policymakers, as they suggest that the current contractionary settings are gradually working to bring down capacity utilisation and price pressures.
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