Forward orders (the most reliable indicator of domestic demand) remain a touch above average but significantly below levels reported in H1 2018. Confidence has also deteriorated through 2018, hovering at or below average in recent months. Retail continued to report weak outcomes in the month and recreational & personal services have eased since around mid-2018. The eastern states currently report the best conditions but have a less positive outlook than SA and WA. Overall, the survey suggests price pressures remain weak across both inputs and outputs, which is in line with official data pointing to prices (and wages) continuing to grow at relatively weak rates.

Both the business conditions and confidence indexes declined 2pts to +12 and +4 index points respectively. At these levels, conditions remain well above average (even after declining from the highs seen earlier in 2018), while confidence is a little below average.

According to Alan Oster, NAB Group Chief Economist “Although conditions have eased since earlier in 2018, and have been a little volatile over recent months, business conditions remain well above average. This likely reflected a healthy business sector alongside the strength in economic growth through 2018”.