Conditions improved for retail, construction in March: NAB

Product price growth eased to from 1.2% to 0.7% in quarterly equivalent terms. Retail price growth edged down to 1.3% from 1.4%, while recreation and personal services prices grew at 0.9%, from 1.4%.

The context: NAB said that by industry, there were positive signs for retail and construction which both saw improvement in confidence and conditions in the month, though in trend terms conditions remain weakest in these two rate-exposed sectors.

Forward orders improved — especially in retail — but are still negative and below average.

Meanwhile, there are tentative signs that supply and demand are coming into better balance with capacity utilisation continuing to ease — though gradually and from a high level.

In line with this, the month saw some modest easing in the pace of labour and materials cost growth but both remain elevated.

What they said: NAB chief economist Alan Oster said: “We’ve now seen conditions running a little above average and confidence a little below average for the better part of a year, which is a fairly unusual result in the history of the survey".

“Fundamentally, it tells us that firms have continued to be a bit concerned about the outlook even as the economy has remained resilient," he said.

“At some point, we have to expect these two headline measures to come back into better balance, either because firms’ concerns are allayed and the outlook improves, or because the economy slows further — and of course we hope it will be the former rather than the latter.

“At an industry level, there was some positive news with a strong rise in conditions and confidence in both retail and construction, which are two of the sectors we have been most concerned about.

“In trend terms, conditions are still weakest in these two sectors but it is nonetheless encouraging. We will wait to see if they improve further over the months ahead.”