Australian business conditions rise to the highest level since the Global Financial Crisis

The latest NAB business survey was stronger than expected in March, revealing business confidence levels at decade highs.

According to Mason Stevens research, the improvement was supported by positive changes in the services, mining and wholesale sectors, and was partly offset by an under-performing retail sector.

Source: Mason Stevens Daily

If we look at state data, Queensland saw the largest gain in business conditions last month, even considering the negative impact of Cyclone Debbie. It’s possible that the extreme weather conditions prevented some respondents from answering the survey. New South Wales and Victoria retain the highest levels, and Western Australia had the lowest.

Surveyed profitability is now at 11 points above its long-term average, with employment and trading conditions also at decade-high levels.

Source: Mason Stevens Daily

Also, key forward looking components such as the “forward-orders-to-stocks-ratio” and capex indicate improving underlying positive momentum in 2017. Importantly, these indicators are close to comparable periods when the RBA started increasing interest rates. In fact, Goldman Sachs believes there will be a 25 basis point increase by November of this year.

On the other hand, while business are clearly optimistic, consumers appear to be more cautious. The latest Westpac consumer sentiment survey showed a 0.7% decline from 99.7 to 99.0 in April, marking the fifth consecutive month when the index has been below 100.

Source: Westpac Economics

If you want to learn how to invest in stocks and analyse the market to identify profitable or deadly turning points, contact United Global Capital today for a no cost, no obligation consultation on 03 8657 7640 or email [email protected] to learn about Quality, Value, Trend (QVT) investment selection methodology.

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The information contained in this article is General in nature and has been prepared without taking into account your objectives, financial situation and needs.

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