The latest NAB monthly survey has revealed a steady level of business confidence ahead of the Federal Budget.
The findings highlight relatively unchanged conditions of subdued confidence, which the NAB says points to a lack of movement towards “a sustained economic recovery developing”.
The recent rate cuts have failed to boost confidence in the business sector, with confidence levels holding at +3 last month. This below-average level follows a +6 in March.
“In trend terms, the recent upward trajectory of conditions remains intact and is broadly at levels consistent with average rates of activity over the history of the survey,” NAB said.
“All components of business conditions (trading, profitability and employment) weakened in April, with employment dipping back into negative territory.”
The NAB expects economic forecasts to remain mostly unchanged when updates are drawn up after the Federal Budget is announced. Despite the improvement in economic partials, the bank suggests more lifting is needed from the non-mining sector in order to offset “domestic demand of sharply lower mining investment and the hit to income from commodity prices”.
“The RBA’s rate cut in May was a line-ball decision in our view, but with partials improving and inflation expected to remain relatively subdued, the RBA is likely to remain on hold for some time unless unemployment rises more than expected (forecast to peak at 6.4 per cent in late 2015).”