Australia Business Confidence & Conditions Strengthen In January

Australia’s business confidence and conditions improved in January signaling that the economy remained resilient to headwinds from inflation and higher interest rates, survey results from National Australia Bank showed on Tuesday.

The business confidence index rose to +6 in January from zero in December. Following two months of rebound, confidence turned positive after easing into negative territory late in 2022.

The survey showed that the transport and utilities and wholesale industries drove the increase in confidence, with others broadly unchanged.

After three months of softening, the business conditions index advanced to 18 from 13 a month ago.

All three sub-components of the conditions index improved from December. The trading conditions indicator gained eight points to +28, the profitability index climbed three points to +17 and the employment sub-index rose two points to 10.

Further, leading indicators also edged higher in January. Forward orders climbed three points to +6 and capacity utilization improved to 85.7 percent, reaching the record highs seen in mid-2022.

The improvement in confidence suggests firms are more optimistic about outlook as concerns about global growth prospects ease, NAB Chief Economist Alan Oster said. At the same time, strong conditions provide evidence that the economy is more resilient than previously expected.

“From here, the pace of ongoing supply chain healing and strength of wage growth will be important in shaping how much further cost pressures ease, while the resilience of consumption will continue to be tested as higher rates are passed through to households,” Oster added.

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