Business confidence, conditions hit multi-year peaks

Business confidence and conditions have lifted to multi-year peaks, NAB’s monthly survey shows.

The positive outcome for boardrooms follows a strong December.

Business confidence and conditions rose to multi-year peaks in January, as a rising sharemarket and seasonal influences left a positive mark.

The NAB Monthly Business Survey revealed a six-point jump in the business conditions index to +16, around levels seen in the pre-GFC economic boom, while the sentiment index lifted four points to a reading of +10.

The positive outcome follows a strong December, although caution was urged in interpreting the results as a sign of a significant turnaround in the economy given seasonal impacts.

“Recent strength in the NAB Business Survey is consistent with an anticipated rebound in economic activity, following the very weak third-quarter national accounts,” NAB chief economist Alan Oster said.

“With that said, a confluence of seasonal factors suggests it is unwise to get too carried away with the result just yet, especially as some key industries remain fairly weak.

“As for business confidence, we suspect the enthusiasm in financial markets has helped a lot. If sustained, confidence at these levels could see firms revise up their capital expenditure and hiring plans.”

The positive reading belied “ongoing weakness” in retail, although the survey did note some improvement last month that drew it out of negative numbers.

A negative reading is now well behind the mining sector, which has seen conditions rapidly improve in recent months as commodity prices soar to multi-year highs.

The employment index also showed significant signs of progress, advancing five points to a six-year peak of +7.

“The employment index has now hit its highest level since 2011, having previously been stubbornly muted for some time,” Mr Oster said.

“This month’s jump in employment conditions bodes well for the generally underperforming labour market, and suggests stronger job creation than we have seen from the ABS in their labour force survey lately.”