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Canberra, Darwin and Hobart petrol prices fallBusiness conditions fall the most since GFCWeekly Petrol Prices; NAB survey
Petrol: According to data from the Australian Institute of Petroleum, the national average price of unleaded petrol rose by 5.7 cents last week to six-week highs of 131.8 cents a litre.
Falling pump prices: The average price of unleaded petrol has fallen to 13-month lows in Canberra and Hobart and 15-month lows in Darwin according to Motor Mouth.
Business conditions: The NAB business conditions index fell from +10.6 points to four-year lows of +2.2 points in December. The 8.4 point decline was the biggest monthly fall since October 2008 and below the long-run average of 5.8 points.
Business confidence: The NAB Business confidence index eased slightly from +3.4 points to near threeyear lows of +2.8 points, below the long-run average of 6.0 points. 
What does it all mean?
Aussie motorists have enjoyed lower petrol prices for most of the summer holidays. But discounting cycles have now ended in southern and eastern capital cities. Average unleaded petrol prices are now closer to $1.30 a litre, up by around 10 cents from recent 16-month lows seen in mid-January. Crude oil prices have lifted by 12-15 per cent so far in January as OPEC and its allies have curbed output.
Smaller capital cities, such as Canberra, Darwin and Hobart don’t benefit from regular discounting cycles. The less competitive fuel markets have seen unleaded pump prices remain stuck at around $1.50-$1.60 a litre for most of 2018. However, there is some good news for motorists at last. Pump prices in all three cities have fallen over the past week. In fact, unleaded petrol is the cheapest in 13 months in Hobart and Canberra at $1.43 a litre and at 15-month lows of $1.28 a litre in the Top End.
Aussie business conditions continue to ease from record highs and appear to have peaked. Weakness was broad-based in December, led lower by falling sales, profits and hiring. The moderation in business activity and conditions verifies recent purchasing managers’ surveys on manufacturing and services from both the Commonwealth Bank and AiGroup. Falling forward orders and exports, suggest that the weakening domestic and global economic backdrop are weighing on confidence and activity.
Month-to-month outcomes can be volatile, particularly over the Christmas/New Year period. The decline in business conditions during December was the largest since October 2008. That said, the smoothed 12-month moving average business conditions index at 15 points is just below the record high levelof 17.3 points six months ago and still remains well above its long-run average of 5.8 points.
What do the figures show?Petrol prices
According to data from the Australian Institute of Petroleum, the national average price of unleaded petrol rose by 5.7 cents last week to six-week highs of 131.8 cents a litre.
The metropolitan petrol price rose by 7.8 cents to 132.3 cents per litre, and the regional price rose by 1.7 cents to 130.9 cents per litre.
Average unleaded petrol prices across states and territories over the past week were: Sydney (up by 12.6 cents to 125.9 c/l), Melbourne (up by 9.7 cents to 135.8 c/l), Brisbane (up by 4.4 cents to 134.7 c/l), Adelaide (up by 9.2 cents to 135.6 c/l), Perth (up by 1.4 cents to 128.2 c/l), Darwin (down by 0.6 cents to 128.5 c/l), Canberra (down by 0.5 cents to 143.3 c/l) and Hobart (down by 2.2 cents to 143.2 c/l).
Today, the national average wholesale (terminal gate) unleaded petrol price stands at 117.4 cents a litre, up by 0.4 cents over the week. The terminal gate diesel price stands at 129.4 cents a litre, up by 1.0 cent over the past week.
The national average diesel petrol price rose by 0.9 cents to 142.2 cents a litre over the week. The metropolitan price rose by 1.3 cents to 140.8 cents a litre with the regional price up by 0.6 cents to 143.4 cents a litre.
Last week, the key Singapore gasoline price fell by US$1.40 or 2.2 per cent to US$61.25 a barrel. In Australian dollar terms, the Singapore gasoline price fell by 77 cents or 0.9 per cent last week to $86.33 a barrel or 54.29 cents a litre.
MotorMouth records the following average retail prices for capital cities today: Sydney 135.9c; Melbourne 132.0c; Brisbane 130.7c; Adelaide 126.3c; Perth 138.5c; Canberra 143.1c; Darwin 128.4c; Hobart 142.9c. National Australia Bank Business Survey
The NAB business conditions index fell from +10.6 points in November to four-year lows of +2.2 points in December. The long-term average is +5.8 points.
The NAB business confidence index eased slightly from +3.4 points to near three-year lows of +2.8 points in December, below the long-term average of 6.0 points. The survey was undertaken from January 8 to 14.
The rolling annual average business conditions index fell from +16.1 points in November to +15.0 points in December, below the record high of +17.3 points in June, but well above the long-run average of 5.9 points.
And the rolling annual average business confidence index fell from +7.8 points in November to +7.1 points in December, remaining above the long-run average of 5.9 points.
Components: the index of trading conditions fell from +14.7 points to +6.6 points; employment fell from +8.8 points to +4.0 points; profitability fell from +7.8 points to – 0.4 points; forward orders fell from -0.1 points to -0.7points; stocks fell from +3.7 points to +2.3 points; exports fell from +0.7 points to +0.6 points; exporters’ sales fell from +2.8 points to +2.4 points.
Inflationary indicators: The monthly reading of labour costs rose at a 0.7 per cent quarterly rate in December after a 1.2 per cent rise in November. Purchase costs rose at a 0.6 per cent quarterly rate in December after a 1.0 per cent rise in November. Final product prices rose at a 0.3 per cent quarterly rate, down from +0.4 per cent. Retail prices were flat after rising by 0.3 per cent quarterly rate in November.
Capacity utilisation eased from 82.1 per cent to 82.0 per cent in December, and remains above the long-term average of 81.1 per cent.
The proportion of firms reporting that they did not require credit increased from 50 per cent to 73 per cent.
NAB reported: “While interpreting data around the holiday period can be difficult, the fall in December continues the trend decline in business conditions seen through 2018. Although conditions started the year at relatively high levels, these declines taken at face value suggest a significant slowing in business activity”.
What is the importance of the economic data?
Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
The monthly National Australia Bank business survey is valuable in providing a timely reading about the health of Corporate Australia. Key indicators of business conditions such as orders, employment, profitability and capacity use are covered together with a gauge on confidence levels.
What are the implications for interest rates and investors?
Reserve Bank Board member, Ian Harper, said today in an interview for the Wall Street Journal that “the domestic economy, everything I’ve seen, shows that it is still strong” and that he expects the next move in interest rates to be up. But today’s business survey offers a counterbalance to Mr Harper’s view. NAB have cautioned against reading too much into December’s result, given volatility during the holiday period. But Aussie businesses are contending with a growing list of challenges, including slowing Chinese demand, weakening domestic household consumption and political uncertainty with a Federal election due by May.
Employment growth was solid in 2018. Over 120,000 jobs were created in Victoria and there were an extra 94,000 jobs generated in New South Wales. Unemployment rates are in both states are the lowest since records began in 1978 at a smidgen over 4 per cent. Labour market strength and solid population growth both remain crucial to the economic outlook.
If business conditions, confidence and profits continue to ease and investment softens, as suggested by recent NAB surveys, this could weigh on hiring intentions, impacting the monetary policy outlook. Either way, the Reserve Bank’s ‘wall of worry’ is increasing with all eyes on its communication, particularly its economic growth forecasts, likely to be in sharp focus next week.
CommSec expects interest rates to be unchanged for the foreseeable future.
Published by Ryan Felsman, Senior Economist, CommSec