February 22, 2024

Comments from the desk of NAB’s Chief Economist – 22 February 2024

NAB’s Chief Economist, Alan Oster provides his thoughts on the Australian and Global economy.


We have recently released our monthly business survey and our local and global outlooks as well as our NAB Data Insights. So where are we now?

To me, the NAB Business Survey for January showed further slowing in momentum with business conditions, confidence, and forward orders now all at below long-run averages. That said, the economy is still growing – albeit at a slow rate. There are however pockets of real weakness – especially retail/wholesale and manufacturing (which is obviously very rate sensitive). Forward indicators are also not shooting the lights out.

Against that our internal bank data suggested that retail spending was better in January – up around 1½%. But business revenues suffered. The other part of the survey that was interesting was a kick up in retail and purchase costs. While not alarming, it appears that after significant discounting in late 2023, business returned to trying to improve their margins.

As mentioned last month, our latest consumer survey suggested that individuals are now more concerned about their ability to get/keep their jobs. Obviously, the ABS Labour market data reinforced that concern. But a word of caution as this is an extremely seasonal period and the ABS noted that there were more than 20k individuals who had a job but were yet to start work. So, to me, I’d like to see the February data before getting too nervous. That said over the past 6 months unemployment has increased by around ½ a percent. Clearly an easing from the very tight labour market we had seen over the preceding year.

A couple of other data points are interesting. Our Q4 SME Survey showed weaker conditions and confidence at the SME level than our NAB Quarterly Survey which focuses on larger firms. And that the smaller the firm the worse the results – especially their cash flows. Also, our Commercial Property survey suggested that while CBD Hotels and Industrial are very strong, Office and CBD retail are not.

So, there are lots of different pressures at present but on our Australian forecasts we essentially have not changed much. As we look at the first half of 2024, we see no reason to expect much improvement from the current very slow growth. Indeed, the risks for the consumer are probably on the downside. That said, for the second half of 2024, we see Government relief to cost of living pressures, and Stage 3 tax cuts helping to lift momentum while the RBA may begin to gradually ease rates from November. Overall, we still expect GDP growth of only 1.7% through the year.

For further details please see, Comments from the Chief Economist (February 2024)