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Market Analyst
Australian business sentiment has been negative for ten months, and the latest NAB survey shows it contracting at a faster pace for a third straight month. The Reserve Bank of Australia's earlier rate hikes are only now showing up clearly in business and consumer surveys, even though a fourth hike has already been delivered. Australian unemployment has climbed to a five-year high, running above the central bank's own forecast, and money markets have scaled back expectations for one more hike. The surveys point to a tightening cycle whose full cost is arriving with a delay.
Matt Simpson, StoneX Media Market Analyst, has spent 15 years analyzing forex, indices, gold and oil, and holds the CFTe and MSTA technical analysis credentials. Based in Brisbane, he covers FX macro and market sentiment, tracking how Australian economic data and Reserve Bank of Australia policy feed through to the Australian dollar.
Australian business sentiment is registering the Reserve Bank of Australia's earlier tightening with a lag, as the first three rate hikes only now filter into survey data. In Simpson's words, "Business sentiment contracted at a faster pace for the third month in a row, according to NAB, and has been negative now for ten months." The NAB reading also sits 6.5 points below its long-term average, a gap that has widened as each hike works through company balance sheets. Notably, the most recent hike is not yet reflected in these numbers, so Australian business sentiment is capturing only part of the tightening already in the system.
Australian consumer sentiment is deteriorating alongside business confidence, with households increasingly focused on the labor market and the cost of further tightening. Australian unemployment has climbed to a five-year high and above the Reserve Bank of Australia's own fourth-quarter forecast, giving those household fears a concrete anchor. Part-time roles have driven recent job losses, while participation has been turning lower over the last couple of years. The consumer survey has become a direct read on how rate hikes are landing in Australian homes. According to Simpson, "Westpac's consumer sentiment report shows concerns over unemployment, family finances and further hikes."
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Matt Simpson, StoneX Media Market Analyst
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