NAB's Quarterly Business Survey - September 2008

Key survey results

• Business conditions weaken significantly to mid 2001 levels - consistent with subdued current activity & annual growth in non-farm GDP slowing to 2% in Q3 2008;
• Business confidence steadies for now - well above levels of 1990 recession;
• In contrast, near & medium term expectations continue to be adjusted lower - notably forward orders, hiring intentions & annual capex plans;
• Capacity utilisation & labour market tightness ease significantly.  Inflation momentum still high - driven by rising purchase costs - rather than increased wage pressures;
• Nab's Australian forecasts unchanged on bearish side of "consensus" view.  Downside risks remain - at home & abroad - with much dependent on success of global financial rescue underway;
• Global GDP growth (on a broader definition) lowered to only 2½% in 2009 - including recessions in US, UK, Japan and Europe, together with slower growth in emerging economies;
• Local GDP to slow to 1¼% in 2009. Full effects of falls in share & key commodity prices falls & slow global growth weigh on prospects, notwithstanding expectations of stimulatory policy responses from both Governments & RBA;
• Nab sees RBA cash rate cut from 6% to 4½% by mid 2009 as well as aggressive cuts by central banks elsewhere; Federal Budget likely to go from surplus to deficit of around $10bn.

Download NAB Quarterly Business Survey - Sept 08