Confidence among Australian businesses has soared to a three-year high, but conditions are still subdued and forecasts remain unchanged as international financial conditions remain perilous.
The latest NAB Monthly Business Survey found while businesses have enjoyed the same post-election buzz in confidence as seen in consumers, other conditions are subdued.
As a result, NAB expects unemployment to rise to 6% by the end of the year, and even reach 6.75% by the end of 2014. CPI is expected to drop to 2.2% by the end of 2013.
“The federal election result appears to have helped confidence further but the gains were uneven,” NAB chief economist Alan Oster said in a statement.
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“Low borrowing rates, rising consumer sentiment and a lower dollar may have also helped – especially in recreation and personal services and retail.”
Conditions increased but still remain at negative four points, which NAB calls “relatively low”. Conditions have improved in finance, business, property and construction, but remain “worrying weak” in mining and manufacturing.
While business confidence increased by eight points to 12, the indexes measuring profitability and conditions are both at negative four points. Employment is also soft, improving three points to negative six.
There have been lifts in the business, property and construction industries, NAB said, especially the latter which has seen accelerating house price increases and higher sentiment.
“While a majority of industries continued to report negative activity readings, forward indicators, including forward orders, stocks and capacity utilisation, generally strengthened in the month, suggesting near-term activity may improve,” it said.
Unfortunately, NAB said, the higher confidence is yet to filter through to business activity.
“The sentiment outcome appears to predominantly reflect political changes but lower rates
and AUD as well as strengthening asset prices (especially housing) may have helped,” it said.
“Nonetheless labour market forward indicators remain poor.”