Business conditions ‘improve slightly’

The National Australia Bank (NAB) business conditions survey showed conditions rose to seven index points in September, up from five the month before, and still above the zero level that separates optimists from pessimists.

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However, business confidence slid one index point to 10 points.

“The survey reflects the multi-speed economy now emerging, with conditions much stronger in mining and transport than in retail and manufacturing, while construction (might be transitioning) from dependence on public to private sector demand,” NAB said in the report, released on Tuesday.

As part of its stimulus package, the federal government invested heavily in infrastructure projects.

Over the past year, the government has slowly reduced that stimulus.

Industries contributing to the improvement in overall conditions included mining, construction, finance, and transport and utilities.

Conditions deteriorated in manufacturing and wholesale, while there was only a marginal decline in recreation.

Conditions in September were strongest in mining at 57 points and transport and utilities at 25 points.

“Although mining sector conditions have been particularly volatile over recent months, the sectors trend has remained firmly positive,” the survey said.

At the other end of the spectrum, conditions remained weakest in retail at -4 points and was matched by a decline in wholesale business conditions.

Manufacturing, meanwhile, grew just one index point, reflecting the strength of the Australian dollar, which late last week touched a 27-year high of 99.18 US cents.

Forward orders, stocks and capacity utilisation all improved, with the report suggesting the economy may be starting to emerge from the weakness shown in the early part of the September quarter.