A measure of Australian business conditions climbed to its highest since early 2008 in June as sales and profits picked up across a range of industries, another sign the economy had regained its feet after stumbling early in the year. National Australia Bank surveyed more than 400 firms to compile its index of business conditions which rose 4 points to +15 in June, and far above the long-run average of +5.
The survey's measure of business confidence added 1 point to +9, again beating the long-run average. "Most industries are performing well in the survey, which reflects positively on the broader economic environment," said NAB chief economist, Alan Oster. "The lift in conditions was largely driven by stronger trading conditions and profitability, suggesting a much needed lift in demand, while employment conditions were steady."
The run of upbeat surveys holds out hope for a bounce in economic activity after bad weather kept growth to just 0.3 percent in the first quarter. The Reserve Bank of Australia (RBA) argued that growth would revive when it held interest rates steady at 1.5 percent following a policy meeting last week. The survey's measure of sales jumped 6 points to a very strong +21 in June, while business profits rose 5 points to +15. Its measure of employment held steady at +7, again above average.
NAB said that outcome was consistent with annual job creation of around 240,000, or around 20,000 per month, and was enough to nudge the unemployment rate lower from the current level of 5.5 percent. Forward orders also added a point to +4, suggesting the improvement in demand could have legs. There was little sign of inflationary pressure in the survey, with labour costs subdued. Retail prices turned higher after a drop in May, though were still growing at a modest 0.5 percent for the second quarter as a whole.
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