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Business confidence grows: NAB

Business confidence grows: NAB

(31 January 2018 – Australia) Australia's business confidence and conditions give optimistic outlook for investment, employment growth

Australian business conditions remained upbeat last month as both profits and sales were both healthy.

The country’s business sector looked promising in early 2018. Business conditions and confidence are stronger than ever compared to the recent years. Aside from a positive outlook for investment, it is also a good sign for a broader economy and employment growth.

The most recent National Australia Bank (NAB) Australian Business Confidence Survey for December 2017 showed an improvement in confidence. Improvements in profitability, trading and confidence have been recorded as well.

The survey’s measure of profitability ticked up a point to +15 last month, while its sales index climbed one point to +18. Its measure of business confidence bounced to the highest reading since July (4 points to +11).

The improvement in confidence, as suggested by the survey, helps to narrow the gap to the separate conditions index which stayed at elevated levels. “The business confidence index bounced 4 points to +11 index points, the highest level since July 2017, perhaps driven by a stronger global economic backdrop,”  NAB Chief Economist Alan Oster said.

The NAB measure of employment points to strong jobs growth of about 300,000 annually. Construction firms saw booming conditions amid public investment and housing.

Oster explained that final retail prices weakened sharply last month into negative territory, and are running at a slower rate than purchases costs and labour costs, pointing to margin compression.

“The employment index implies employment growth of a little less than 300,000 at present, and a slowdown to around 240,000 per annum over the next 6 months, or a monthly pace of around 20,000 per month,” Oster said.

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