Australian business confidence at record high; what does it mean for economy?

3 min read | April 13, 2021 04:23 PM AEST | By Ashish

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Australian business confidence at record high; what does it mean for economy?

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Summary

The measure of Australian business confidence hit its record high in March, indicating rapid economic recovery.

According to the survey, NAB index of business conditions soared by 8 points to 25 in March.

Even as business confidence recovered sharply, measure of confidence slipped by 3 points.

Amid the ongoing coronavirus pandemic, Australian business confidence hit its record high in March, indicating rapid economic recovery. The surge in business confidence came after the companies reported sharp rise in sales, profits and employment in the previous month, the National Australia Bank’s (ASX:NAB) latest survey released on Tuesday showed.

According to the survey, the NAB index of business conditions soared by 8 points to 25 in March. Most sectors and regions reported strength. Even as business confidence recovered sharply, the measure of confidence slipped by 3 points. However, it still remained upbeat at 15.

Source: © Icefields | Megapixl.com

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Rebound phase

Commenting on the latest data, NAB chief economist Alan Oster said that business activity had risen at a strong pace as the coronavirus pandemic-induced restrictions eased.

Even as a brief lockdown was observed in Brisbane, the business conditions were not hit negatively as conditions in Queensland remained upbeat.

The survey's index of national sales surged by 12 points to another all-time peak of 35, while profitability soared 8 points to 26 and employment gained 7 points to 16.

Labour market recovery

The survey suggested the labour market was continuing its surprisingly brisk recovery. Measures of capacity utilisation and investment climbed further above their pre-virus levels and their long-run averages.

Source: © Scaliger | Megapixl.com

Oster was of the view that business investment and hiring would receive further lift as the underlying pace of growth appears relatively healthy.

ANZ survey

Meanwhile, another survey by ANZ (ASX:ANZ) revealed that the confidence index surged 5.9% last week to its highest since late 2019. It was partly a reaction to the ending of the Brisbane lockdown and partly to the news of a planned travel bubble with New Zealand.

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How stock market fared

The Australian benchmark equity index ASX 200 traded lower during the day so far, down 8.20 points or 0.12 per cent to 6,965.80. The bottom performing stocks in this index are Perenti Global Ltd (ASX:PRN) and Alumina Ltd (ASX:AWC).

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