NAB Monthly Business Survey

NAB's latest monthly business survey was very positive and has given the RBA further cause to maintain the pause stance. NAB, who were at the depth of the crisis forecasting a cash rate of 2.00% by the end of 09 are now suggesting that the current status quo is likely with a reduced possibility of an easing in late 09. They expect tightening not to start until late 10 with a cash rate by year end (2010) of 3.25%.

The two areas to watch closely are unemployment and inflation.

Briefly:

• Business Confidence improves further & turn positive;
• Conditions improve significantly, suggesting a temporary return to moderate growth;
• Orders improve strongly and sales growth turn positive;
• Pace of job shedding eases;
• Capacity Utilisation remains broadly unchanged;
• And wage/price pressures ease.