Australia NAB business confidence jumped to 9-month high in January

The business confidence index rose by 2pts to +12 index points, its highest level since April 2017, beating the estimate of 10.00, according to National Australia Bank (NAB) business survey 2018. The business conditions index jumped 6pts to a strong +19 index points in January compared to an expected drop to 12 index points. 

The rise in confidence, though a good news, should be read with caution as the survey was conducted before the current turbulence in international financial markets. 

Key quotes (Alan Oster, NAB Group Chief Economist)

While forward orders have eased a little they remain above average and capacity utilization has been trending up which is a good sign for both future investment and employment.

The employment index remains consistent with a solid rate of job creation of approximately 20K per month.

RBA to consider a gradual removal of emergency policy stimulus, as long as there are signs of wages strengthening.

We still expect the first RBA hike to come in the second half of this year if unemployment falls further and wages show improvement, although the risk is that the RBA will move later as it has indicated that it is in no rush to lift rates.