Australia: Business conditions strong, despite weak GDP – HSBC

Australian GDP growth may be running below trend, but business conditions remain strong as noted by the Paul Bloxham, Chief Economist at HSBC.

Key Quotes

“Today’s NAB survey showed business conditions around post-Global Financial Crisis highs in May, while capacity utilisation jumped sharply. Business confidence fell, but remains above average. Some observers may be sceptical, suggesting that these ‘soft’ data have been tracking ahead of ‘hard’ numbers (like GDP) in many countries. But local GDP has recently been knocked around by weather effects.”

“The business surveys might be providing a better guide to economic conditions. For monetary policy, the key point is that the RBA appear to prefer the business survey readings, having downplayed the GDP slowdown and emphasised the business surveys in last week’s post-meeting statement.”