Business Conditions In Australia Have Never Been This Good

Latest business survey by the National Australia Bank (NAB) revealed that business conditions and confidence have soared since January and the domestic economy is strengthening rapidly. There are also positive signs that Australia’s labour market is back on track and the lull in hiring that was evident late last year will not likely be repeated in 2017.

Because of enormous improvements in operating conditions, businesses in Australia are making a stonking comeback. According to Allan Oster, Chief economist of NAB, the rise in trading conditions has contributed greatly to the outcome but profits remain unchanged at solid levels. Employment index has hit the highest levels since 2011 that have been previously muted. The outlook for hiring has improved and sales and profitability remain at elevated levels.

Because of the improvements in employment conditions, everything bodes well for the generally underperforming labour market. In a recent labour survey, strong job creation can be expected after the sharp decline in employment growth during the 2nd half of 2016.

Improvements in the mining sector are not surprising because of the enormous price gains generated from Australia’s key commodity exports in recent months. However, in terms of retail operating conditions, the trend is still “very soft” which suggests that the general attitude towards consumption remains cloudy. According to Oster, most of the strength is confined in New South Wales while other mainland states are showing mixed performances.

At present, Western Australia is the only state that is exhibiting negative business conditions, an indication that improvement in conditions while certainly not unilateral is expanding across the country. With New South Wales’ strength, there can be a partial reflection in the state’s booming housing market with prices increasing strongly in 2016 and early 2017. However, there are still doubts whether the positive developments in recent months can be sustained for the future.

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