Sponsored Links
Business confidence in Australia rose to its highest level in almost six years, driven by better business conditions including improved trading and profitability.
The National Australia Bank said Tue day that the index measuring business confidence rose eight points to 18 in August, the highest reading since October 2003. The index continued to remain well above long-term average levels.
The improvement was broad based but was particularly noticeable in retail, finance, manufacturing, and recreational and personal services. However, lower confidence was seen in construction and transport.
Business conditions moved higher by three points to 4, which is the best reading since the middle of 2008, reflecting a strong rise in the trading and profitability indices.
However, the employment index dropped six points to minus 11. Forward orders fell significantly by seven points to minus 2. Capacity utilization edged down to 80% from 80.4%.
At the same time, the inventories index rose marginally to minus 9 from minus 10. Labor costs climbed 0.3% on a seasonally adjusted basis after 0.2% growth last month, while on an annual basis, costs climbed 0.7%, the lowest rise on record.
On the pricing front, economy wide prices and retail prices and purchase costs all increased. Credit availability continued to tighten, with the index rising to 18 from 14.
The NAB said the higher confidence levels would mean the prospective falls in investment levels could be less that previously expected. It also pointed out that more likely than not the Australian economy edged up in the third quarter, with a good deal of momentum also being brought about by the stimulus.
The bank expects a small drop in the GDP growth in late 2009, even as it revised upwards its outlook for the whole year. For the the second half of 2009, it expects a broadly flat outcome. The bank expects the economy to show 0.5% growth this year, an upward revision from its earlier estimate of stagnation, and a considerably stronger growth in 2010 of 2.1%.
However, it forecasts that unemployment would rise, and expects the rate to peak at 6.75% in the third quarter of 2010 compared to its earlier peak forecast of 7.25%.
Given the much better domestic outlook and better confidence levels, the NAB expects the Reserve Bank of Australia to move interest rates to more normal levels. The NAB expects the central bank to start raising interest rates by November even though it does not rule out an increase in October itself.
The NAB expects the most likely policy decision to being three consecutive 25 percentage point increase in rates in November, December and February, thereby taking the rate to 3.75% by early 2010. By 2011, it expects further policy tightening to bring the rates to 5.5%.
0 komentar:
Post a Comment