Business conditions hold steady

Business conditions have edged up slightly, rising one point in the month to +15 index points, after a slight easing in May, according to the National Australia Bank’s monthly business survey.

However, the retail sector remains “noticeably weaker” than other industries, reflecting “ongoing structural issues facing the sector”, such as increased competition from overseas entrants and online sales. Retail prices were unchanged in the month.

At the same time, there was a pick-up in conditions in manufacturing, construction, finance, business and property services.

“In trend terms, conditions in the mining sector remain highest even as the mining boom continues to wind down, while the retail sector remains clearly the weakest,” NAB chief economist Alan Oster said.

“The construction sector is also reporting robust conditions reflecting the large pipeline of infrastructure work and significant pipeline of housing construction under way.”

Business confidence slipped one point to +6, close to the long-run average level.

While there was a pick-up in the trading and profitability indexes, wages growth remains weak.

The employment index fell for a second straight month but NAB is forecasting a decline in the unemployment rate and a wages growth pickup over 2018

“The survey continues to suggest relatively robust growth in the economy but also suggests that broader inflationary pressures remain weak,” Mr Oster said.

“This growth will be necessary to reduce the amount of spare capacity in the economy, which should in time see a rise in prices and wages growth, which we consider key to the path of monetary policy over the next few years.”