February Business Conditions Hit Record High, Confidence Dips
NAB’s Business Survey has revealed business conditions in February were at a record high. The index reached its highest point in more than 20 years, jumping 3 points to +21.
As business conditions continue to soar, interestingly, business confidence is down (2 points to +9). Analysts speculate the results reflect market volatility.
According to NAB, in February Australia’s struggling retail sector posted its best reading in nearly eight months. The bank warns ‘seasonal factors’ may have affected data.
The sub-index for recreational and personal services has also slowed down over the last four months.
NAB states whilst these results remain “above average” it’s a trend “worth watching” to assess whether “softness in consumer spending is broadening beyond retail”.
February’s Business Survey reflects gains across most sectors, largely driven by increases in profitability and trading – both aspects climbed 2 points, up from January’s former heights.
Business conditions remain strong for the majority of Australian states – Queensland and Tasmania lead the pack with readings above 20. West Australia (+14) and South Australia (+12) posted the highest business confidence for the period.
NAB Chief Economist Alan Oster claims February’s strong results follow the bank’s positive growth outlook, and will likely prompt the RBA to raise interest rates later this year.
“After last week’s release of below expectation GDP growth data, the strength in business conditions and leading indicators makes us more confident that Australia will see stronger economic growth in coming quarters on the back of LNG exports, and business and government investment”
“This will sustain strong jobs growth, reduce unemployment, and put gradual upwards pressure on private sector wages.”