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National Australia Bank's survey of more than
400 firms showed its index of business conditions jumped 6
points to stand at +8 in July, the highest since early 2010 and
an upbeat sign for the economy in the third quarter.
The report's index of business confidence also improved, rising
3 points to +11 led by strength in home construction and
retailing.
The survey's measure of sales climbed 7 points to +14, while
that for profitability surged 7 points to +10. The employment
index added 3 points but was still soft overall at 0.
The pick up in activity also looked to have legs with the index
of forward orders rising 4 points to +5, well above its long-run
average.
"Firms still appear unfazed by the Federal government's 'tough
budget', possibly taking comfort in the bounce back in consumer
confidence," said NAB's chief economist, Alan Oster.
"Stronger sales and profits are driving the trend, but the
recovery continues to be relatively jobless with the employment
index seeing more moderate gains."
The improvement would be welcome news to the Reserve Bank of
Australia (RBA) which has held interest rates at record lows of
2.5 percent for an entire year to support the economy as a long
boom in mining investment fades.
The central bank is a close watcher of the NAB survey, which has
a good track record as a leading indicator of economic activity.
The survey showed capacity utilization jumped notably in July to
81.0 percent, following a sharp fall in June, reaching its
highest level since early 2012.
Measures of price pressures accelerated a little in July. Labour
costs were up 1 percent at a quarterly rate, in part due to a
rise in the minimum wage.
Final product prices remained subdued, though retail prices did
pick up somewhat.
(Reporting by Wayne Cole; Editing by Shri Navaratnam)
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