Australia: Mixed NAB business survey for May – RBC CM

Research Team at RBC Capital Markets, notes that the Australia’s NAB business survey for May was mixed as the headline conditions were decent at +10 and steady from an upwardly revised April.

Key Quotes

“Trading conditions were seen as the strongest since 2007. Most price indicators were a bit firmer in the month, but employment was the weakest link. Confidence fell to +3 from 5 and sits below the longrun average.

The RBA tends to highlight conditions in this survey, and given the political dynamics, it’s probably not surprising that confidence has been dented somewhat. Generally firmer business conditions in 2016 have not prevented a rate cut and are unlikely to stand in the way of further easing given the wage and price dynamics.

OIS markets have a full 25bps rate cut discounted by December, in line with RBC’s forecast of one further cut. It would seem that a lot of bad news from a domestic rate perspective is in the price for the time being."