Australian survey shows a six-year high in business conditions

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11th November 2014 15:19 - Business Support

In October, a private survey by National Australia Bank (NAB), showed that business conditions have hit a six-year high.

The monthly business survey indicated a rise in business conditions, which was the highest monthly increment in the history of the survey. Business conditions leaped 12 points on NAB’s index, to a ranking of 13.

However, Alan Oster, chief economist of NAB claimed that the increase may be an anomaly, taking into account that confidence in businesses is spiralling downwards.

Similarly, the research revealed that business confidence is continually falling, as companies remain unsure over near-term demand. The index fell by 1 point, which gave business confidence a ranking of 4. This result is the lowest since the mid-2013 pre-election jump.

An improvement was also seen in the mining industry, in both confidence and conditions. The results showed the largest increase, in both confidence and conditions, for the industry. However, the findings still showed mining as the sector with the lowest overall conditions results.

A further drop in the “bellwether” wholesale industry saw 25 out of 26 months where conditions for wholesale have been in negative territory.

Wholesale conditions can be used as a fairly good indicator of overall business conditions.

In October, labour costs growth remained the same at 0.9 per cent. This finding was consistent with a drop in the labour market and a poor wage growth.

Mr Oster claimed that regardless of improvements in NAB’s employment index, the trend continues to remain at levels, which allude to wage pressures to come.

Mr Oster also suggested that employment is expected to peak at approximately 6.5 per cent, and is not expected to change until tightening commences towards the end of 2015.

Alternate research revealed that consumers are growing increasingly confident. However, fears about the economy are still worrying some.

According to a recent ANZ/Roy Morgan consumer confidence survey, confidence has increased just 0.2 per cent, compared to 114.8 in early November.

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