Australian business confidence improves in Jan, activity off highs

SYDNEY, Feb 9 (Reuters) - A measure of Australian business confidence picked up in January while conditions eased back from historic highs as coronavirus breakouts curbed activity in a few cities but were ultimately contained.

National Australia Bank’s index of business confidence doubled to +10 points in January, while its measure of conditions fell to +7 from a very strong +16 in December.

The conditions index was still a world away from the trough of -34 hit last April at the height of the coronavirus pandemic and remained just above its long-run average of +6.

The index of sales halved to +11 in January, while profitability fell 4 points to +9 and employment eased 7 points to +3.

“Business started the year on a more optimistic note, even as conditions eased from the strength we saw in December,” said NAB Group Chief Economist Alan Oster.

“Importantly, employment conditions remain in positive territory – so overall businesses are still expanding their workforce.”

The labour market has recovered far faster than expected in recent months with the jobless rate dropping to 6.6% in December, from a peak of 7.5% last July.

The survey’s measure of capacity utilisation edged up to 81.0% in January, to be around its pre-COVID level. “We hope to see capacity utilisation rise further over coming months as demand picks up, which should, in turn, see businesses consider expanding capacity through hiring or investing,” said Oster.

The survey’s index of investment firmed to +1 in January, up from a low of -32 last year and its first positive reading since the pandemic began. (Reporting by Wayne Cole Editing by Shri Navaratnam)