Business conditions improved slightly in November, thanks to a boost in mining, retail and services sectors, a survey has found.
National Australia Bank’s monthly business survey showed improvement in business conditions were seen across most indicators, reflecting economic growth that is largely on trend, the survey said.
Labour costs, purchase costs and final product prices all posted gains but trading conditions took a backward step.
Business confidence was unchanged, but remained positive at plus two index points.
HSBC chief economist Paul Bloxham said the figures were in line with expectations, although employment was stronger than other data had predicted.
“Overall though it looks like the economy is in good shape – there are a few signs here that things are about to decline, but the conditions in the economy look like they’re tracking well, albeit modestly,” he said.
“One thing that’s interesting is that the employment part has ticked up again which runs counter to some of the anecdotes out there.
“The conditions and the confidence numbers look as though they’re broadly stable in the month.”
JP Morgan economist Tom Kennedy said the figures showed the Australian economy was holding up despite concerns about the eurozone financial crisis, but could be doing better.
“Considering the economic woes troubling Europe, the resilience of business confidence and conditions over the past couple of months is a positive,” he said.
“However, it should be noted that business confidence is significantly lower than the long run average, indicating that in a broader sense firms remain cautious on the economic outlook.
“Moving into the new year, volatility in financial markets, the European sovereign debt crisis, and uncertainty about underlying demand will keep a lid on business confidence even with the RBA cutting interest rates further,” Mr Kennedy said.
Across the different industries conditions were mixed, with mining, transport and services posting strong growth, while manufacturing and construction was notably weaker.
“Given that we have seen some slowing in global activity data, especially in Europe, the up tick in conditions in the month is perhaps more favourable than might have been expected,” the survey said.
“However, business conditions were by no means equal across sectors. The pick up in business conditions in the month reflected improvements in employment conditions and profitability, which were partly offset by a deterioration in trading conditions.”
NAB said the survey results would see a rise in domestic growth forecasts, which predict the domestic economy to grow at a pace of 2.1 per cent in 2011 before lifting to 4.0 per cent per cent in 2012.
“Our GDP forecasts have been strengthened to reflect stronger consumption and mining investment growth,” the survey said.
