NAB Business Confidence falls to +4

Tuesday, Aug 11 2015

Business confidence and conditions have dropped back from recent strong gains, with Chinese economic jitters believed to be a key concern. National Australia Bank's widely-watched monthly business survey shows that business confidence halved from +8 to +4, while conditions fell from +10 to +6.

The fall in conditions was driven by a steep decline in 'trading' from a very high reading of +19 in June to a still-strong +11 in July, while profitability fell from +10 to +7. NAB's economists characterise the decline as paring back "the exuberant readings on business confidence seen in recent months".

"While confidence eased in most industries, much of the change stemmed from mining and construction firms (which includes a large share of non-residential and engineering firms), suggesting an escalation in Chinese growth concerns could be putting firms on alert," they wrote in the report.

However, on the more stable trend measure, confidence remains around average levels and conditions also remain firmly positive. "Looking through the month-to-month volatility, however, both conditions and confidence are suggesting a turnaround in the non-mining economy," the report noted. "Conditions vary greatly across industries, but the service sectors continue to outperform."

Data did not have any major impact on Aussie which was pushed sharply down against US dollar on news on devaluation of China's yuan, as many other currencies as well, and is currently being traded around 0.7320 area. Pair is likely to find support around 0.7250 level and resistance above 0.7370 area.

More in this category: « Sterling little changed in a quite Monday trade China devalued yuan by 1.9% »