NAB Monthly Business Survey March 2019: Employment improving, potentially bullish for AUD

Brought forward by a week, March monthly business survey data has hit the screens as follows (mixed, but potentially encouraging and bullish for the Aussie with employment improving although confidence deteriorating:

• Australia March Business Conditions 7 (prev 4)
• Australia March Business Confidence 0 (prev 2)

"Survey results were mixed this month. Business conditions saw a welcome increase to above average levels with each subcomponent of the index rising. The employment index itself remains well above average, suggesting that for now, survey indicators of labour demand remain favourable. Against this, business confidence (the expectation for conditions going forward) weakened further in the month and continued the below average run. Other forward looking indicators – capacity utilisation and forward orders – showed some improvement but remain at or below average. The pattern of business conditions and confidence across states appears to have shifted somewhat with the gap between the east and west narrowing a little over recent months. Conditions remain most favourable in Tasmania and NSW, but have weakened in QLD and VIC. By industry, conditions remain most favourable in mining and weakest in retail. While the pickup in conditions this month is encouraging, conditions are well below the levels seen in early 2018 and forward indicators point to a risk of further slowing in momentum in the business sector. Elsewhere in the survey, measures of capex and cash flow generally continue to track down,"  - NAB Monthly Business Survey: March 2019

RBA in focus:

Meanwhile, traders look ahead to the RBA this week. Analysts at TD Securities explained that the RBA is unlikely to shift from its neutral policy stance-disappointing the doves-ahead of a likely decent fiscal boost.

• The RBA can retain its upbeat labour market outlook given the unemployment rate dropped to 4.9% in Feb, reinforcing the current stance of monetary policy is doing its job.
• There were three speeches from RBA officials in March that focused on housing and/or households. None of the speeches pointed to a shift towards cutting the cash rate.
• While the RBA does acknowledge there are risks to consumption, the Bank can afford to assess developments over coming months - the next read on consumption is Q1 GDP on 5th June.