SYDNEY, Feb 6 (Reuters) - Australian businesses were at their most confident in over two-and-a half years last quarter, with firms anticipating a marked pick-up in activity and investment in coming months.
National Australia Bank’s quarterly survey of more than 900 firms found an improvement in sales, profits and employment over the fourth quarter of last year, and a notable upward revision to investment plans that could help offset a slowdown in the mining sector.
The report’s index of business confidence rose 3 points in the quarter to stand at 8, double the long-run average as optimists outnumber pessimists.
Its measure of business conditions rose 4 points to -3, while firms were much more upbeat on the future with the index for the year ahead jumping to a lofty 24.
“Better sentiment was felt across most states and industries,” noted NAB chief economist Alan Oster. “A better housing sector, higher asset prices and a lower currency and interest rates are all contributing.”
Record low rates of 2.5 percent have been steadily percolating through the economy, giving the Reserve Bank of Australia (RBA) the confidence this week to conclude that further easing would not be needed.
Of particular relief to the central bank would be the survey’s index of investment intentions which climbed 6 points to 20 in the quarter, the highest in two years.
The RBA has been hoping for a revival in non-mining investment to cushion the economy as massive spending on resource projects slows over the next couple of years.
There was also little sign of inflationary pressure in the NAB survey with labour costs and retail prices subdued. (Reporting by Wayne Cole; Editing by Eric Meijer)