Australian business conditions picked up in September as sales and profits rebounded while a marked rise in forward orders pointed to further growth ahead, a survey showed on Tuesday.
National Australia Bank’s monthly survey of more than 500 firms showed its index of business conditions rose one point to +8 in September, to remain above its long-run average.
Its index of business confidence held at +6, after bouncing 2 points in August. Measures of sales and profits both rebounded in the month, with sales hitting a strong +17, though employment fell back 3 points to +1.
Boding well for the outlook was a hefty 6 point jump in forward orders to a high +8, while the survey’s measure of capital spending also climbed to a strong +8.
“This outcome suggests good near-term prospects for activity – consistent with solid business conditions,” said NAB’s head of Australian economics, Riki Polygenis.
Polygenis noted the strength in business conditions had become more narrow based in recent months as services outperformed, while the retail sector had turned lower.
“It suggests a multi-speed economy, but one where most key non-mining sectors are performing well in the near-term,” she said.
“However, weakening retail conditions are a significant risk to our outlook, especially considering that consumption accounts for more than 50 percent of Australian GDP.”
Services and home building have been underpinned by easy monetary policy, with the Reserve Bank of Australia (RBA) cutting rates to a record low of 1.5 percent in August.
NAB is more cautious on the longer-term outlook, predicting home building and resource exports would cool in the second half of next year as the benefits of a past decline in the local currency fade.