Growth, inflation and labour market all easing
Post-farmgate agribusiness conditions rose significantly to their highest level in 9 years in the December quarter, with across-the-board improvements in all the three components of trading, profitability and employment.
Post-farmgate conditions surge to highest level in nine years
Post-farmgate agribusiness conditions rose significantly in the December quarter to reach their highest level in nine years, according to the latest National Australia Bank (NAB) Post-farmgate Agribusiness Survey.
General Manager NAB Agribusiness, Khan Horne said it was also the first time in three years that all three indicators which make up the conditions index – trading, profitability and employment – have recorded positive readings.
“The stark pick-up in post-farmgate business conditions has finally translated into increased confidence levels among post-farmgate agribusinesses, with the index pushing into positive territory for the first time since the December quarter of 2005,” said Mr Horne.
“The December quarter is traditionally associated with more favourable seasonal factors post-farmgate, and these findings add to recent results which suggest a strengthening in the underlying fundamentals.
“Trading conditions were the leading contributor, rising sharply (+24) to reach their highest level since the start of the survey. Driving this was the sharp depreciation in the AUD, which fell three per cent in November and December, stronger asset prices and a sustained low-interest global environment,” he said.
NAB is forecasting the AUD to continue to track lower to US 84 cents by the 2014 December quarter, with a further 25bp cut to interest rates expected in November this year.
The research found better sales margins and cash flows also provided continuing momentum to the profitability index, which also reached a record level (+16).
Protein exports continued to grow at a robust pace, with beef and lamb capping off the calendar year on a strong note.
Dairy prices set a new record in the quarter, despite strong output growth in New Zealand. This is largely attributed to a voracious import appetite for processed dairy products by Chinese consumers.
A noted improvement was also recorded in the quarter’s employment conditions, which sat 15 points above the five year average of -5, and comes off the back of increased trading activity through the festive season.
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