We released the NAB Quarterly Business Survey earlier given the interest in up-to-date price data and constraints on production at this time – as well as the importance of understanding the impact of the war in Europe which started after the monthly business survey in February. .
Confidence (down 5 points to +14 index points) and Conditions (down 5 points to +9 index points) have retreated from Q4 rebound levels, but both remain above above average. The decline in confidence and conditions was relatively widespread across industries and states.
“Confidence and conditions have held up relatively well given the disruptions to omicron’s business early in the first quarter and events unfolding in Europe,” said Alan Oster, NAB Group Chief Economist.
“Although trust declined in a quarterly sense, there was little difference in trust between the first half of the sample who were surveyed before the escalation in Ukraine and the second half of the sample after the invasion. “
Forward-looking indicators remain healthy after falling slightly. In addition to above-average confidence and high capacity utilization rates, employment and investment expectations for the next 12 months remain very high.
“Encouragingly, the economy rebounded very quickly from the Delta shutdowns, and although Omicron has caused some disruption, forward-looking indicators suggest that activity will remain strong over the next year. Investment intentions are particularly strong – and this will be important if business investment is to rise from its current lows and allow firms to continue to expand employment and benefit from stronger productivity gains.
Questions about pricing and constraints continue to reflect the impact of supply chain disruptions and rising commodity prices as well as the tightening labor market. The share of companies reporting difficulties in finding suitable labor has decreased slightly, but remains high at 84%. The share of companies reporting availability of materials as a constraint increased slightly to 48%, also a very high level for this question. With this in mind, pricing pressures remain evident in the survey, with both input and output prices growing slightly higher in the quarter from already high levels.
“Additional details from the survey indicate the continued impact of supply chain disruptions and a tighter labor market. Constraint data does not yet indicate any easing on the input side – and that is particularly evident in manufacturing and construction, but materials and labor still seem to be significant constraints in most industries.
“As a result, pricing pressures remain high. The recovery in the quarter was modest for input and output prices, but these were already following survey highs. The retail sector saw a larger increase in price growth, suggesting that we may well see another strong CPI print for the first quarter when the data comes out in late April.
“Overall, the survey continues to paint an optimistic picture of growth, including the possibility of a recovery in business investment. This comes despite world events and still some disruption due to the virus. That said, the challenges for businesses and policymakers remain clear, with pricing pressures continuing to build. »
For more information, please see the NAB Quarterly Business Survey (March 2022)