Business
confidence recovered in September from its worst reading in two years,
according to the latest National Australia Bank survey, as industry
captains welcomed Malcolm Turnbull's replacement of Tony Abbott as Prime
Minister and global market upheaval subsided.
NAB
said on Tuesday that its main business confidence index jumped from 1
point in August - its lowest level since mid-2013 - to 5 points in
September. The results, gleaned from a survey of about 400 companies in
the last week of September, suggests business support for Mr Turnbull,
and relief at the end of leadership uncertainty within the Liberal
Party.
However,
the confidence index remains below its mid-year peak, and was not
broad-based across all industries. Sentiment in mining, construction and
finance fell, the last two perhaps because of perceptions that the
residential housing boom is faltering.
"Business
confidence recorded a partial recovery in September, increasing to 5
index points from 1," NAB economists, led by Alan Oster, wrote.
"It
is not clear to what extent this reflects the change in leadership of
the Liberal Party, as solid business conditions and some dissipation of
financial market jitters may have also contributed to the result," they
said.
The
main business conditions index was flat at 9 points, with trading,
profitability, forward orders, stocks and exports all down on their
August levels. Employment, however, climbed from negative 1 in August to
4 points in September.
Within
this, however, NAB noted sharper convergence between sectors and
industries, with services continuing to perform much better than
traditional industrial mainstays such as mining and manufacturing.
Levels
of confidence, too, varied widely between different industries, with
the improvement concentrated in transport and utilities, which were up
14 index points, and personal services, which surged 12 points. Not
surprisingly, given weak commodity prices and softening demand from
China, mining companies were the least confident, registering a negative
14 index points.
NAB said the latest results suggested the lower Australian dollar had helped the "non-mining sector recovery" build momentum.
"This
is particularly apparent in industries thought to be highly responsive
to currency changes in the near-term, including personal and business
services," the bank said.
It
stuck to forecasts that the Reserve Bank of Australia would leave rates
on hold at 2 per cent for the forseeable future, with no further
monetary easing.
"Weak
commodity prices and falling mining investment will remain a drag on
economic activity and downside risks from offshore remain pronounced,"
the bank's economists said.
"However,
we find it difficult to mount a case for further policy easing on
purely domestic grounds and view market pricing for another 25 basis
point cut over the coming six months as overly pessimistic."
Source: sydneymorningherald
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