Business conditions steady in November: NAB

Consistent and above average business conditions continue to act as a positive sign that the non-mining sector recovery is gaining traction, says NAB.

The November 2015 NAB Monthly Business Survey indicated that business conditions have remained at above average levels for the past nine months.

NAB Group chief economist Alan Oster said: “In conjunction with signs of improvement in the labour market, [this] means we can put more faith in the building non-mining sector recovery.”

However, according to NAB, while business conditions are stable, business confidence has been “disappointingly muted”.

While NAB's confidence index rose from +3 to +5, this is still below the long-term average.

“Given improved prospects for the domestic economy outside of mining, relatively subdued confidence is most likely a reflection of the uncertain global economic environment,” said Mr Oster.

NAB also reported that capacity utilisation eased in November, from 81.2 per cent to 80.9 per cent.

“Capacity utilisation is a useful measure of the underlying health of the economy. It eased a little this month, but the trend remains distinctly positive, which bodes well for business investment and the labour market,” Mr Oster said.

Roy Morgan Research also noted the influence of international events on business confidence in November.

Norman Morris, Roy Morgan Research industry communications director, said speculation on tax reform, iron ore prices and recent terrorist attacks potentially reduced business confidence.

“To maintain strong business confidence it will now be necessary for the federal government to take action that will convince businesses that they have a clear, detailed and fair plan for budget recovery and economic growth,” Mr Morris said.

“The direction international events take will also have a major impact on business and consumer confidence but the government has only limited influence over these external factors.”

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