For months the jobs market was the only bright spot in the monthly surveys of Australian business conditions and confidence from the National Australia Bank.
That’s despite worsening conditions, falling confidence, the retail recession, worsening profit margins and growing concern about the health of the economy.
But in the January survey, released yesterday, the National Australia Bank revealed there had been a worsening in prospects for the jobs market.
The January business survey revealed that the proportion of Australian businesses planning to boost hiring levels fell sharply last month, suggesting sluggish economic growth may see employment growth slow in the months ahead.
The National Australia Bank’s business survey revealed confidence and operating conditions remained below historic averages in January, showing little sign of recovering after weakening noticeably in recent years.
“The survey suggests more of the same in January. Business conditions moved sideways and there was a small improvement in confidence,” said NAB chief economist Alan Oster.
“While it appears conditions have stabilised after a solid decline since early-2018 they are low and suggest that activity remains weak in the business sector”.
Views towards trading conditions and profitability remained at below-average levels in the latest survey. However, the survey’s employment measure weakened sharply, signaling the potential for higher unemployment in the months ahead.
“The concern this month is the decline in employment,” Mr. Oster said. “It is now below average and a worry given the labour market has been a bright spot in the economic data.”
“While one month does not make a trend, the RBA will be paying close attention to the result given its optimistic economic forecasts for the years ahead is underpinned by the belief job market conditions will continue to strengthen,” the NAB survey found.
Adding to the risk of a hiring slowdown, the survey’s leading indicators – capacity utilisation and new orders – remained weak last month.
The NAB said business conditions were unchanged in January and remain below average. The employment index dropped 3 pts to +1 index point and the trading conditions index edged 1pt lower. Profitability rose 1pt in the month. All three sub-components are now below average.
Business confidence lifted slightly to -1 index points following two consecutive declines. It is well below the long-run average of +6 index points.
“Businesses continue to tell us that they don’t see an imminent recovery. Leading indicators are stable but certainly not improving” Mr. Oster said.
