Australia: Business confidence ascends higher in July
August 8, 2017
The business confidence index produced by the National Australia Bank (NAB) rose to 12 points in July, up from the 8 points registered in June and the highest level since early 2008. The indicator now sits comfortably above its long-term average of 6 points and far above the 0-point threshold, which means that Australian businesses are optimistic regarding economic conditions in the coming months.
According to the NAB, business conditions improved in July as employment and trading conditions remained at high levels compared to their long-run averages, the former signaling optimism in the current stance of the labor market. However, despite the solid readings in both business confidence and business conditions, the NAB is particularly weary of the widening gap between different industries as professional services business confidence gained momentum but sentiment in retail and wholesale activities remained sluggish. The stagnation in consumer-oriented industries is indicative of households’ continued burden of debt and underemployment. According to the NAB, employment growth and business conditions remain the bright spot in the economic outlook whereas housing construction, household debt and the weaker Australian dollar remain prominent risks moving forward.
Author: Lindsey Ice, Economist