Business confidence hits three year high


business, arrow, graph, chartBusiness confidence is at a three and a half year high after the election of the coalition government.

The National Australia Bank Business Survey showed business confidence rose eight index points to 12 in September, its highest level since March 2010.

But that positivity is yet to filter through to actual business conditions, which remained in negative territory at -4 points, up from -7 in August.

“This is the largest two-monthly gain in confidence since May-June 2009, during the immediate aftermath of the global financial crisis,” NAB said on Tuesday.

“The recent turnaround in business confidence may reflect a number of factors, including recent strengthening in asset price growth, better consumer sentiment, the moderate improvement in business conditions and a lift in forward looking indicators.

“Fundamentally, however, it appears to reflect a reaction to the political change.”

The key issue now was whether the confidence boost would continue and how long it would take to translate into activity and investment, it said.

Improvements in orders, stocks and capacity utilisation pointed to better activity, although employment conditions remained subdued.

“Employment continues to be a weak spot, although there are signs that the demand for labour may be stabilising, at least in terms of hours worked,” NAB said.

“However, it seems unlikely that the domestic economy will generate sufficient growth to stem the rise in the unemployment rate over the next year.”

NAB still expects the Reserve Bank to cut rates again but have changed the timing of a possible reduction, given the recent boost to sentiment and house prices, from November to February.


You have 7 articles remaining. Unlock 15 free articles a month, it’s free.