NAB Business Confidence Index - Explained
What is the NAB Business Confidence Index?
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What is the NAB Business Confidence Index?
The NAB Business Confidence Index is an index published by the National Australia Bank used for assessing the strength of business in Australia. The National Australia Bank publishes the business confidence index monthly and quarterly based on the surveys carried out on the Australian businesses. Around 600 small, medium and large non-agricultural Australian companies and organizations are covered in this survey. The index provides an overall picture of the Australian economy. The NAB Business Confidence Index was first published in 1997 and is continuing since.
Back to: ECONOMIC ANALYSIS & MONETARY POLICY
How is the NAB Business Confidence Index Used?
The NAB Business Confidence Index is developed based on a single survey question. The question that is asked to the companies is, "excluding normal seasonal changes, how do you expect business conditions facing your industry to change in the next three months?. It aims to measure the expectation of business condition for the upcoming months and a simple average of trading, profitability and employment indices of the respondent companies. The negative responses are deducted from the positive responses to get the net balance. The index is prepared on this net balance. A positive net balance indicates improving business confidence and a negative net balance indicates a failing business confidence. The survey question aims to gauge the near-term economic outlook. Since 1997 until 2018 the average of the index is 5.98. The highest point was reached in April 2002, the index was +21. During the global economic crisis of 2008, the index hit the record low of -30 in October that year. In November 2018 the index fell to 3, lowest since January 2016. The National Australian Bank further analyzes the index according to industry, region, and components. The monthly report covers different business conditions including tax regulation, housing prices, interest rates, supply and demand, labor market, wages, input and output prices, and others. The companies that are covered by the survey operates in various industries including manufacturing, construction, mining, retail and wholesale trade, transportation, recreation and entertainment, and finance and IT. Separate charts are furnished in the full report for each of these industries and for eight states of Australia. A detailed text report is also compiled by the analysts based on a comprehensive questionnaire. The text report analyses the factors influencing the respondents opinions. The index affects the movement of the value of the Australian dollar.
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