Australia: NAB business survey hints at investment pop – TDS

According to the analysts at TDS, Australia’s February NAB business survey saw confidence and conditions pull back from the January highs as expected and more importantly, Jan/Feb averages hint at solid Q1 2017 activity as employment, profits and investment, for example, all remain in the expansion zone.

Key Quotes

“As we said after the recent disappointing capex report, if business confidence remains buoyant then investment could surprise to the upside. This is starting to take shape with an upbeat Q1 net balance for investment hinting at an imminent jump in non-mining investment.”

“The RBA watches this survey and will be encouraged by buoyant activity. Now for gloomy consumers to keep up (last 99.6, update tomorrow). The AUD saw a “weak” report, easing from $US0.757 to $US0.755 and underperformed the NZD.”

“RBA Ass.t Gov Bullock, the new head of financial stability, summarised financial risks post GFC. RBA/ APRA prefer to lean against risks (instead of the old days of 'clean up after any bust') and quoted an example of a macro tool—only one has ever been deployed— which is APRA capping investor loan growth at 10%pa. Her conclusion? As the impact of these tools fade over time, “we are prepared to do more if needed" which has been misinterpreted as the RBA being responsible for macro tools.”

“If macro tools are deployed by APRA soon, we will likely push our November hike into 2018.”