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Trading conditions for Australian businesses last month were at their highest level since the global financial crisis, although confidence remained relatively lacklustre during the period.
- Business conditions rise 5pts to +14
- North Queensland had lower survey returns than usual, probably due to Cyclone Debbie
- Services sector, including health and education, very strong
National Australia Bank's widely-watched Monthly Business Survey revealed conditions jumped by 5 points to a reading of +14 last month, primarily driven by the major services sectors and wholesale.
However, NAB's chief economist Alan Oster said the data is slightly skewed, as Cyclone Debbie coincided with a lower response rate from firms in Northern Queensland.
"A lot of our responders in Northern Queensland didn't respond and so, therefore, you've got a bias up in the Queensland data," he told ABC News.
"But fundamentally the economy, particularly in the services sector, is doing pretty well and mining is also improving on the back of higher commodity prices.
"So I wouldn't say these are the best conditions in underlying terms since the GFC, but I'm saying the mining sector is pretty strong out there at present."
Mr Oster said conditions have also been boosted by growth in personal and recreational services, which is the consumer buying services rather than discretionary retail, as well as strength in apartment building.
"I think it's a sign that, in the service sector, the economy is pretty strong," he said.
"So you look at health, you look at education and that's really strong.
"You're seeing wealth effects from house prices in NSW, Victoria and south-east Queensland and so all those things are combining and what we've seen is at least no sort of kick back in terms of profit and in terms of employment."
But the retail industry remains a concern for NAB's economists, with conditions falling further, dropping into negative territory.
Business confidence was lower in March, falling 1 point to a reading of +6, although Mr Oster said that was still consistent with a strong economy.
"If anything, you expect business confidence to be a bit higher than what it is at present and it may well be that some of the geopolitical risk is making businesses nervous," he hypothesised.
Topics: economic-trends, business-economics-and-finance, australia
First posted