According to the latest NAB Monthly Business Survey, business conditions rose by four points to +12 index points over the month – above the long-run average of +5, and its highest level since 2008.
NAB chief economist Alan Oster said the jump provides more assurance that the Australian economy is weathering the global challenges well, and is successfully transitioning through the end of the mining boom.
“The lift in business conditions to these levels not only suggests that Australia is withstanding the uncertainty offshore, but that the recovery in the non-mining sectors of the economy have in fact stepped up a gear this month,” Mr Oster said.
“It is particularly encouraging to see the employment index point towards ongoing strength in the labour market, supported by signs the recovery is broadening into previous trouble spots such as manufacturing.”
The survey showed that business conditions are strongest in the service, construction, manufacturing and transport industries.
However, business conditions remain weak in the mining and retail industries.
Business confidence increased three points to +6 in March, which is consistent with the long-run average.
“The lift in business confidence suggests lower risks of contagion from global uncertainty, but also provides some assurance that gains in conditions will be sustainable,” Mr Oster said.
He added that his view of the Australian economy outlook remains unchanged.
“We have maintained our expectation for the RBA to keep the interest rate on hold for an extended period.
“However, with inflation remaining low and the AUD drifting higher, the RBA has expressed a willingness to cut rates should the non-mining sector recovery exhibit signs of faltering, albeit there is no evidence of that yet.”