The optimism of Australian businesses finally appears to be matched by actually business conditions, according to a new survey from National Australian Bank.
NAB’s monthly business survey for October showed yet another jump in business confidence, up a further two points to 16 index points.
While the further jump in confidence is surprising given how hard confidence has run this year, what is particularly impressive is the jump in actual business conditions, which increased nine points to 12 index points – the highest level since early 2008.
“The most striking finding in the October Business Survey is the sharp acceleration in actual business outcomes. While confidence has surged in recent times, business conditions had remained significantly below long-term averages. That has now changed,” NAB chief economist Alan Oster says.
“In many ways, very high business confidence readings appear to be bearing fruit.”
All three measures of actual business conditions jumped sharply during the last three months. Business profits increased by 9 to 13 index points, sales increased by 15 index points and the employment index recorded its first positive reading August 2008, just before the collapse of Lehman Brothers.
Another very positive sign is the pick up in stock levels, with businesses no longer simply drawing on excess stock to meet higher demand.
“It appears that the recovery is broadening out and business is becoming more convinced of its sustainability.”
However, exports remain low, indicating that the recovery is very much based on the domestic economy.
From an industry perspective, wholesale, retail and construction remains unchanged but growth is strong in the transport, manufacturing and personal and recreational services sector (which includes hospitality and tourism).
On a state-by-state basis, Victoria is the best performing state, followed by New South Wales and South Australia. Confidence in Western Australia is also improving in line with a pick up in the mining sector.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
