Is your industry on the up or on the nose? A sector-by-sector guide

The mining, retail, and recreation industries are all experiencing better business conditions but the manufacturing, construction and wholesale sectors are still in the doldrums, according to the latest analysis in NAB’s monthly business survey.

The results come as the survey shows “quite large and disparate shifts in conditions” across all industries during April. It also comes as a variety of sectors are waiting to see how they will be affected by the Federal Budget to be handed down this evening – and whether they will receive any assistance.

Overall, business conditions fell in April despite some improvement, with some declines in profitability and trading conditions.

“Forward indicators of demand were fairly lacklustre,” the survey said, noting that underlying demand growth in the June quarter may have already slowed to around 3%, with gross domestic product growth of around 2.75%.

But with the multi-speed economy affecting millions of businesses in different ways, an overall picture may be too broad. Here’s how the economy is performing, according to the NAB survey, sector by sector:

Retail

Despite rising costs and low consumer confidence, conditions improved in the retail sector, although NAB notes they’re still weak overall. Actual confidence levels are on the rise, however, up eight points.

There were other areas of weakness, however, with forward orders down 10 points, while labour cost growth was up 1.3%, although that’s a generally low figure.

Prices, however, have fallen 0.7% at a quarterly rate. So while conditions have improved, confidence is still low and prices are declining.

Manufacturing

Conditions are still poor, dropping during April, to reach an index of negative 19 points.  Confidence remains at zero points, and forward orders are down as well. Capacity utilisation was also down, and capital expenditure is particularly weak.

Cashflow was also the weakest out of all industries, while employment conditions were among the softest in the country. Profitability fell 14 index points.

Mining

Conditions remain strong, outperforming all other industries – with an index of 53 points. Confidence, however, has fallen, perhaps due to the talk over the upcoming resources tax. Forward orders are strong, up nine points, along with capacity utilisation and capital expenditure.

Employment conditions are also very strong, up 40 points, while the industry was also one of the few to see its profitability index improve, up 33 points to 56.

Recreation & Personal Services

Although people may not be spending money on retail goods, they’re definitely spending it on themselves. Conditions in the recreation and personal services industries are among the highest, at nine points. Business confidence is also strong, although capacity utilisation was down.

Capital expenditure was higher at eight points. Cashflow was among the strongest out of all industries, however, price pressures are also some of the strongest at 0.5%.

Trading conditions still remain strong, up 19 points, and profitability was up 15 points as well.

Transport & Utilities

Confidence in this industry has actually picked up, while conditions are on par with mining and personal services. Price inflation has eased, along with purchase costs as well.

However, trading conditions are among the poorest in the country, dropping 29 points to -2. In trend terms, they remain high, however.

Employment conditions have dropped considerably, also down 25 points, and profitability has deteriorated 38 points to -14.

Wholesale

Confidence in the wholesaling industry is still among the lowest in terms of confidence, however, at -2 points.

Forward orders have dropped significantly, and NAB highlights this area as “worryingly weak”. Cashflow is strong, but labour costs grew 1.6% and price inflation has also strengthened as well – there are plenty of cost pressures in this industry.

Construction

Conditions are still poor in the construction industry, down seven points, although that’s better than both wholesale and retail. Confidence, however, remains high at 10 points, in front of both retail and transport & utilities.

NAB points out, however, that this confidence is most likely due to mining investments rather than residential construction.

Yet forward orders have improved, despite cashflow being weak, and labour cost growth has been soft.