Australian Business Confidence Hits Highest Level in 2.5 years

Getty/ Chung Sung-Jun

Australian businesses faced a stark dichotomy between hope and reality in the three months to December with confidence reaching a 2.5-year high, while conditions trailed.

NAB’s quarterly business survey for Q4 2013 put business conditions at a 12-month high of -3 points, remaining below trend and behind business confidence at 8 points. From the report:

“The post-election ‘honeymoon’ continued well into the December quarter, helping to prop up confidence, although a better housing sector (predominately driven by investors), higher asset prices and a lower AUD and interest rates are all contributing.”

Looking at business conditions, NAB found improvements in the key sub-indices of profitability, employment and forward orders, although they remained in the contraction zone, printing -3, -6 and -2 respectively.

Trading conditions were soft for much of the quarter but picked up in December for a +1 print, from -5 the previous quarter.

The economy and business needs this gap between the hope of confidence and the reality of conditions to close. Clearly Australian business still thinks it will.

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