Australian Business Conditions Hit A Two-And-A-Half Year High

Getty/Ian Walton

The NAB has released its Monthly Business Survey for December that shows businesses conditions have jumped to more than a two and a half year high.

The rise of 7 points to +4 now places conditions around trend levels while confidence (+6) was broadly unchanged leaving this also around trend.

Following on from the strong result announced last week in the Commonwealth Bank’s Future Business Index this is a really important signpost that the gap which opened up after the election between the hope of an economic recovery (improved confidence) and reality of a still weak economy (negative business conditions) been closed by the reality of improved business conditions.

It is an unequivocally good piece of economic data for the Australian economy and the NAB said that “the improving trend in business conditions suggest a more optimistic outlook – implying underlying demand growth and GDP growth (6-monthly annualised) of around 3% in Q4, above our forecast.”

As a result the NAB has moved it call for the next rate cut from May to November – but the chances that it will never happen seem to be rising.

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