8 September, AtoZForex.com, Lagos – Australia remains on the brink of a slowdown, as the mining sector has been faltering. According to the official NAB report released earlier today, business conditions point to a further improvement in the non-mining economy, even as jitters in financial markets weigh on confidence.
Australia business confidence pared back further in August (from +4 to +1), unwinding the post budget gains and hitting its lowest level since mid-2013. By component, both trading conditions and profitability recorded a notable improvement, but the employment index remains at very subdued levels.
The outcome adds to the mounting evidence that AUD depreciation and record low interest rates are having the desired effect and helping to offset the weakness in mining. Even so, outcomes vary significantly per given industry. Services sectors continue to outperform, while retail has improved considerably. The ‘bellwether’ wholesale industry remains weak, but probably reflects margin squeeze due to AUD depreciation as other leading indicators (aggregate forward orders and capacity utilization) have improved.
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While confidence tends to track conditions quite closely, recent financial market ructions and China growth concerns appear to have had an unnerving effect on business – albeit not enough to send confidence into negative territory (a good outcome given the degree of market volatility). Confidence eased in most industries, although mining and construction recovered some of last month’s sharp declines.
China trade balance
China’s trade balance showed August exports fell less than expected 5.5 percent from a year earlier, while imports declined by 13.8 percent. Hence, it depicted a trade surplus of $60.24 billion for the month, compared with forecasts of $48.20 billion. Data from China will be closely watched by investors to determine if the economy is improving or remaining at risk. Especially after the recent bout of disappointing data from the region.
On the calendar today
The rest of the day seems relatively quiet, with no major high impact news. Although we have the following in the pipeline:
-6:00 A.M GMT: German Trade Balance which came positive at 22.8B against forecast of 21.8B.
-6:45 A.M GMT: French Trade Balance
-9:00 A.M GMT- Revised GDP q/q
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