ECONOMIC COMMENTARY

Seasonal conditions and declining winter crop forecasts reflect drop in NAB Rural Commodities Index.

RBA to cut in October and again in December, taking the cash rate to 0.5% by year’s end.

This result points to a modest improvement in retail sales, albeit from a poor result last month.

China’s industrial sector struggling ahead of the latest round of trade measures.

Global economic growth slowed further in Q2 2019. Major advanced economy (AE) GDP growth declined to its slowest pace since mid-2016.

Recovery in housing values accelerated in August.

Global growth slows further as trade disputes escalate…again.

In US dollar terms, NAB’s Non-Rural Commodity Price Index is forecast to increase by 1.8% quarter on quarter in Q3 2019.

Cash Rate to 0.5% by February; more stimulus by mid 2020 unless the Government steps in.

Below-trend growth and low inflation still expected as downside risks build. We have inserted another rate cut(s) in early 2020.

Both business confidence and conditions declined in the month, with both now at +1 index point – well below long-run averages.

Our third Agribusiness Banker Survey brings a somewhat more encouraging headline figure for agribusiness conditions, although conditions in NSW and to a lesser extent Queensland remain challenging. Spring rain is sorely needed to see an improvement.