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Australia business conditions boom in Jan, as sales and profits surge
[SYDNEY] Australian business conditions reached near-boom levels in January as sales and profits increased sharply, a survey reported on Tuesday, another sign economic growth had stepped up a gear.
National Australia Bank's index of business conditions climbed 6 points to a very strong +19 in January, far above the long-run average of +5.
The survey's measure of profitability jumped 9 points to +23 in January, while its sales index climbed 8 points to +26. Its often volatile measure of business confidence also bounced 2 points to +12, the highest reading since April last year.
The survey was conducted before last week's bout of instability in global financial markets.
Conditions were solid to strong across all major industry groups with the exception of retail, which continues to struggle with fierce price competition.
The construction industry was particularly upbeat thanks to strength in home building and public works projects.
"We are hopeful that Australia will see stronger economic growth in coming quarters, due to the strength in the labour market, business activity and infrastructure spending," said NAB group chief economist Alan Oster.
A range of surveys have shown similar upbeat outcomes, supporting the Reserve Bank of Australia's (RBA) expectation that economic growth will pick up to more than 3 per cent this year and next.
NAB's survey of more than 400 firms had also been running much hotter than measures of household confidence, though that has changed in the past couple of months with the consumer mood brightening amid robust jobs growth.
The NAB measure of employment held at +6 in January, consistent with jobs growth of around 240,000 a year.
Firms reported a rise in capacity utilisation to 82.7 per cent, well above the long-run average and a positive sign for business investment.
The survey's measures of inflation were mixed with purchase costs and final product prices easing, while retail price growth turned higher after contracting in December.