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Australia business confidence improves in Feb, non-mining shines
[SYDNEY] Australian business conditions strengthened in February with service-based industries proving to be a bright spot for the economy, while business confidence was steady in positive territory, a survey showed on Tuesday.
National Australia Bank's monthly survey of more than 500 firms showed its index of business conditions rose three points to +8 last month. Its business confidence index was steady at +3.
Capacity utilisation rate, a measure of the underlying health of the economy, climbed to 81.5 per cent from 80.9 per cent, reaching its highest since early 2012.
All three components of conditions - trade, profit and employment - improved during the month. Encouragingly, the employment measure rose to +1 from -1, although NAB said it still suggested softer employment growth than the official labour market statistics.
"The service sectors have very much stepped up and are now driving an impressive rebound in non-mining domestic demand," said NAB's chief economist Alan Oster.
"In contrast, the outlook for the global economy remains downbeat and there is still much fear of contagion. That means monetary policy should remain on hold for an extended period, rather than the market expectation for another cut by year end."
At its policy review last week, the Reserve Bank of Australia kept the cash rate steady at a record low 2.0 per cent for a tenth month.
In a speech on Tuesday, RBA Deputy Governor Philip Lowe said the Australian economy is successfully rebalancing after a decade-long boom in mining investment and low inflation means there is still scope for further rate cuts if needed.
The survey was conducted between Feb. 22-26, before official data showed Australia's economy topped all forecasts to grow at the fastest pace in almost two years last quarter.