Business confidence and conditions surge: NAB
Business conditions and confidence improved significantly last month indicating a broad based economic recovery may be underway.
The NAB's keenly observed monthly business survey reported conditions in March lifted to their highest level since 2008, while confidence jumped back to its long term average.
NAB chief economist Alan Oster said the lift in business conditions not only suggested that business is withstanding the uncertainty offshore, but that the recovery in the non-mining sectors of the economy had stepped up a gear in March.
Overall business conditions rose by 3 points to +12, well above the long-run average of +5.
Importantly, the rise was driven by an improvement in the three main components of the conditions index: trade, profit and employment.
"It is particularly encouraging to see the employment index point towards ongoing strength in the labour market, supported by signs the recovery is broadening into previous trouble spots such as manufacturing," Mr Oster said.
"This is an especially good result in the context of a downbeat global economic outlook.
"The lift in business confidence suggests a lower risk of contagion from global uncertainty, but also provides some assurance that gains in conditions will be sustainable."
Services lead the way, mining and retail lag
The survey found, while the services sector continued to be the key economic driver, construction had closed the gap, manufacturing was looking more upbeat and transport was responding to lower fuel prices.
However, mining was still extremely weak and retail was disappointing.
Businesses also reported a healthy decline in spare capacity.
"Tighter capacity, good profitability and improving confidence levels all raise the prospects for a ramping up of business spending and employment ahead," Mr Oster said.
"However, some of the other leading indicators from the survey - such as forward orders - were a little less encouraging."
Business conditions fell sharply in Queensland - down 10 points - and marginally in New South Wales, while Western Australia and South Australia rebounded sharply back into positive territory.
New South Wales and Victoria remain the strongest states in terms of conditions, while Queensland businesses remain the most confident.
Mr Oster said the strength of results meant that the Reserve Bank was likely to keep interest rates on hold for an extended period.
Source: ABC News