Overview

Overall, the survey weakened across most activity measures in the month. Business confidence fell sharply in November, reversing last month’s gains and is now back well below average at -3 index points. Business conditions also softened in the month, with notable declines across most industries. The goods production and distribution sectors – particularly manufacturing and retail – are weakest in trend terms, while the services sectors remain significantly stronger. All three subcomponents of business conditions are now at or below average. Forward orders declined further in the month led by weakness in mining and retail – and continue to track below their long-run average as they have for most of the year. Overall, the survey points to ongoing soft growth in Q4 though with capacity utilisation unchanged at an above-average level it will likely take more time for price pressures to fully normalise. Indeed, price and cost growth indicators were broadly unchanged across the survey, though retail prices fell back to 0.6% in quarterly terms.

Comments from NAB Chief Economist, Alan Oster

Business confidence fell a sharp 8pts to -3 index points, reversing last month’s gains. The declines were broad-based across industries and confidence remains negative and weakest in retail and wholesale.

“Confidence fell sharply in November and is now back below average” said NAB Chief Economist Alan Oster. “While we were optimistic last month, it appears the trend of well below-average confidence remains intact.”

Business conditions also eased in the month with declines across all industries except mining and construction. In trend terms conditions remain weakest in retail and manufacturing. Across the states conditions are weakest in trend terms in SA and Vic.

“Conditions in the goods sector remain weak,” said Mr Oster. “Interestingly conditions in the services sectors – recreation & personal services and finance, business & property services continue to track at a higher rate.”

Forward orders edged down 2pts to -5 index points in the month. Orders are weakest in the mining, retail and wholesale industries in trend terms.

“The forward-looking indicators in the survey remain weak,” said Mr Oster.

Capacity utilisation was unchanged at 82.4% in November and remains above its long-run average of 81.3%. Capex edged up and at +10 index points is also above its average.

“Capacity utilisation continues to gradually trend lower, but was unchanged and above average in November,” said Mr Oster. “Capacity utilisation remains an important dynamic with the growth in activity continuing to look weak but the level of activity remaining high”.

Input cost pressures were broadly unchanged in November. Labour cost growth was unchanged at 1.4% in quarterly equivalent terms, while purchase cost growth edged up 0.2ppts to 1.1% in quarterly equivalent terms.

“Input cost growth has slowed through 2024” said Mr Oster.

Output price growth was unchanged at 0.6% in quarterly equivalent terms. Retail prices growth fell back to 0.6%, while recreation & personal services output price growth edged down to 0.7% in quarterly equivalent terms.

“Output prices in the survey have stabilised at a benign level over recent months but the key consumer facing sectors, retail and recreation & personal services have been a little volatile.”

For more information, please see the NAB Monthly Business Survey (November 2024)