16 April 2018
Bob Cunneen, Senior Economist and Portfolio Specialist, NAB Asset Management
Sources: NAB and Westpac Melbourne Institute (WMI).
Confidence of consumers and businesses are key indicators of economic growth. Consumption, investment and housing activity depend upon confidence. However, confidence surveys can be both leading and misleading indicators. Occasionally confidence may be a reaction to events that are only transitory tremors rather than fundamental signals.
Fortunately there are now encouraging signs for Australia.
NAB’s survey shows business confidence has been steadily improving over recent years (blue line). Low interest rates and rising profits appear to have lifted business confidence - a positive sign for future business investment.
Even the WMI consumer sentiment survey is improving after a tough couple of years from 2014 to 2017 (red line). Consumers seem to be more optimistic given stronger jobs growth. However consumer sentiment is still constrained by rising energy prices and high household debt. So consumer sentiment is yet to match business’ high confidence levels.
This communication is provided by MLC Investments Limited (ABN 30 002 641 661, AFSL 230705) (“MLC”), a member of the National Australia Bank Limited (ABN 12 004 044 937, AFSL 230686) group of companies (“NAB Group”), 105–153 Miller Street, North Sydney 2060. An investment with MLC does not represent a deposit or liability of, and is not guaranteed by, the NAB Group. The information in this communication may constitute general advice. It has been prepared without taking account of individual objectives, financial situation or needs and because of that you should, before acting on the advice, consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs. MLC believes that the information contained in this communication is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made as at the time of compilation. However, no warranty is made as to the accuracy or reliability of this information (which may change without notice). MLC relies on third parties to provide certain information and is not responsible for its accuracy, nor is MLC liable for any loss arising from a person relying on information provided by third parties. Past performance is not a reliable indicator of future performance. This information is directed to and prepared for Australian residents only. MLC may use the services of NAB Group companies where it makes good business sense to do so and will benefit customers. Amounts paid for these services are always negotiated on an arm’s length basis.