The NAB business confidence index in Australia surged to 7 in May 2019 from 0 in April, boosted by the Federal election results and expectations of the RBA rate cut. However, the latest reading could be short-lived, as business conditions weakened (-2 points to 1) with both sales (-5 points to 3) and profitability (-4 points to -3) falling while employment rose (+3 points to 2). Also, forward orders dropped further (-1 point to -3), exports were unchanged (at -1); and capacity utilisation decreased to below its average (80.9% vs 81.1%). Across sectors, the goods distribution industries remained weak, followed by manufacturing, while the services industries appeared to be holding up better still it deteriorated over the past year. Business Confidence in Australia averaged 5.93 Index Points from 1997 until 2019, reaching an all time high of 21 Index Points in April of 2002 and a record low of -30 Index Points in October of 2008.
Business Confidence in Australia is expected to be 3.00 Index Points by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Business Confidence in Australia to stand at 8.00 in 12 months time. In the long-term, the Australia Business Confidence is projected to trend around 6.00 Index Points in 2020, according to our econometric models.