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NAB says the Australian economy is significantly slowing

The National Australia Bank Ltd (ASX: NAB) business survey shows there is a significant slowing of the Australian economy.

The AFR quoted NAB’s chief economist Alan Oster as saying “the weakening in conditions has become relatively broad-based with declines across all industries except mining over the past six months. The decline in conditions has also been evident across all states.”

According to the survey, the retail sector was the only one to report actual negative business conditions, but it doesn’t look particularly good for the whole economy. This won’t be good news for shareholders of companies like JB Hi-Fi Limited (ASX: JBH) and Nick Scali Limited (ASX: NCK).

Business optimism or pessimism is very important because it can dictate whether business invest in new growth projects and perhaps hire more people, or not. If you’re not feeling confident you’re unlikely to spend a lot of cash on expansion. If you’re a consumer you’re not likely to spend as much if the news is telling you the economy may head into a recession.

This wasn’t the only piece of news to come out of NAB today.

NAB’s MLC Wealth announced changes to its Wrap and retail MasterKey Super and Pension Fundamentals products which will deliver administration fee cuts of up to 50%. The Royal Commission is biting hard on the bank sector profits.

MLC Wealth CEO Geoff Lloyd said “We want to lead the industry in winning back trust, and these pricing changes are an important step in showing our clients and their advisers that we have listened to them, and we are changing”.

Effective from 4 February 2019, the administration fees for MLC’s retail Wrap Series 2 platforms will be halved to 0.15% per annum on the balance between $200,000 and $500,000. Administration fees for the balance above $500,000 will be cut 40 per cent to 0.03% per annum.

According to Mr Lloyd, this will make the MLC Wrap platform one of the cheapest in the country.

I wouldn’t base my investment decisions on just a business survey, but I do think we need to be careful in the selection of our ASX shares at this stage.

That’s why I’m attracted to these quality ASX stocks for my portfolio right now.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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