NAB SURVEY: A Surprise Rebound In Business Confidence Pushes Aside The Black Cloud Of The Federal Budget

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Business confidence has rebounded to its highest level in four years, according to the July NAB Business Survey.

The rosier outlook was supported by better business conditions, largely reflecting sales and profits, and a surge in retailer confidence.

And companies appear to be unfazed about the federal budget, at least for now.

“Business confidence improved again in the month, reverting back to post-election highs,” the NAB says.

“A solid jump in business conditions and better forward orders is supporting the relatively optimistic position.

“Stronger sales and profits are driving the trend, but the recovery continues to be relatively jobless with the employment index seeing more moderate gains (remaining at subdued levels).”

Much of the improvement is narrowly based, with construction surging, propped up by high levels of building approvals which will drive construction for many months.

Wholesale also improved, but remains slightly negative.

Changes in conditions varied across industries, as did the levels.

Construction and service industries are the stand out with mining and retail the weakest.

“In contrast to very strong readings for sales and profits, business is still very reluctant to employ,” the NAB says.

The chart below shows business confidence hitting a positive 11 in July, up from 8 in June and 7 in May