SYDNEY Feb 11 A measure of Australian business
conditions rose to its highest in nearly three years in January
and firms felt more confident about the outlook for orders and
employment, a survey reported on Tuesday.
National Australia Bank's survey of more than 400
firms also found a marked improvement in manufacturing,
surprising given constant reports of job cutting and closures.
The report's index of business conditions rose 1 point to +4
in January, the highest since March 2011, while all its various
sub-indicies turned positive. The main measure of business
confidence climbed 2 points to stand at +8, above its long-run
"Conditions look to have turned around a little faster than
we had expected just a few months ago, with low interest rates
and depreciating AUD gaining surprisingly good traction in some
non-mining sectors of the economy," said NAB's chief economist,
"The improvements over recent months have established a
clear upward trend in business activity, suggesting some upside
potential to our current growth outlook."
The better trend in business conditions, if maintained,
implied underlying economic growth of around 3.25 percent for
the first quarter, which would be well above NAB's own forecast.
In an encouraging sign for the subdued labour market, the
survey's measure of employment climbed 5 points to +1 for its
highest reading in 21 months. Manufacturers again reported a big
improvement, followed by sports & recreation and business
There was also promising news for future growth with the
index of forward orders jumping 8 points to +6, the highest
The index of capital spending plans rose 3 points to +4 as a
pick-up in the services sector outweighed a pullback in mining
That would be welcome news for the Reserve Bank of Australia
(RBA), which has been counting on a revival in non-mining
sectors to offset the drag from a cooling resource boom.
Just last week, the central bank all but shut the door on
further rate cuts, citing improving economic conditions and a
pick-up in inflation.
The RBA cut rates to a record low of 2.5 percent last August
and is now expected by many to be on hold for months to come.
The NAB survey also showed some acceleration in inflationary
pressure during January, with labour costs and purchase prices
on the rise.
(Reporting by Wayne Cole; Editing by John Mair)