Australia: Business confidence rises strongly in December
January 30, 2018
The business confidence index produced by the National Australia Bank (NAB) picked up in December to 11 points from November’s revised 7 points (previously reported: +6 points). As a result, the series now sits above its long-run average and the neutral 0-point threshold, which indicates that Australian businesses are largely optimistic regarding economic conditions in the coming months.
According to the NAB, December’s uptick was driven by a more positive outlook in the transport, manufacturing and wholesale sectors, while sentiment in the mining sector dipped slightly from the prior month but remained elevated, likely buoyed by solid commodity prices. All sectors remained firmly in positive territory, with the mining and construction sectors the most upbeat. Construction firms are brushing off concerns about a softening Sydney housing market and an ample supply of homes, thanks to a solid non-residential sector. Forward orders—which tend to accurately reflect domestic non-mining activity—hinted at robust growth in Q4 and a strong start to 2018. In addition, a high capacity utilization rate of 82.2% bodes well for fixed investment this year.
Author: Oliver Reynolds, Economist