Australian business confidence neared a three-year high last month, and it looks like conditions are finally catching up.
Results of NAB’s monthly business survey, released this morning, put conditions up 1 point during the month to 4, while confidence rose 2 points to 8.
“Business conditions consolidated the strong pick up in December, reaching an almost 3 year high,” NAB reported. “Overall conditions are still chasing confidence, but are now close to their long run average.”
Breaking the index down, there is good and bad news in the sub-indices.
Trading fell from 12 to 7 while profitability dropped back from 5 to 3. But employment finally got back in the black rising to +1 from -4 while forward orders rose to 6 from -2.
Overall it looks like a pretty solid monthly result but perhaps highlighting the difficult time of transition the Australian economy faces the NAB added:
Our wholesale leading indicator suggests much weaker underlying conditions, pointing to below trend demand growth continuing into the first quarter of 2014 at around 3%. Against that, the improving trend in business conditions (if maintained) implies underlying GDP growth of around 3¾% in Q1, well above our forecast.