Suddenly, the gloom has lifted and sunlight bathes the Australian economy as we find out that Australian business has suddenly become very bullish about the future.
Yesterday the National Australia Bank’s business confidence and conditions survey for August revealed a very sharp improvement in business confidence from the already solid levels seen since mid-year.
Now it’s the highest seen in nearly six years.
Coming on top of the improvement seen in the jobs market in the ANZ Job Ads Survey and the Olivier online job ads index, the NAB’s latest readings on business confidence and conditions show the recession is now a memory for many in this country’s businesses sector.
The improvement now puts business confidence ahead of the improvement in consumer sentiment and well ahead of still rising business conditions.
The last time we saw confidence this high was in October 2003 and the NAB says the improvement has put confidence now well above the long term averages in its survey.
That could be an overshooting in confidence among many in business relieved not to have had their businesses pummelled like those in the US, UK, Europe and Japan have been hit.
Equally it could also be a belated recognition that conditions in the economy have been better for months, and that the state of the stockmarket (which bottomed in March) has at last started to value the strength of the economy, not just the health of a few troubled financial engineers and overgeared property and infrastructure groups.
The surge in confidence has seen the NAB cut its unemployment peak forecast to 6.75% from 7.25% (which is now the new ANZ forecast).
It has joined the AMP in lowering its jobless peak prediction to well under 7%, indicating that there’s only around 1% or less extra jobless to be produced by this slowdown.
Unemployment is expected to rise to 5.9% in August in tomorrow’s labour force statistics.
Retail sales and housing finance figures for July are out later today and will give us an early taste of what July and the current quarter are looking like.
And the NAB (which has already brought forward its first rate rise forecast to November) says the surge also "further erodes the case for maintaining emergency lows in interest rates – notwithstanding a relatively flat outcome for growth expected in H2 2009".
The bank also says it sees positive growth for the current quarter, instead of a small fall, which now could happen in the last three months of the year.
That was also a concern expressed in last week’s post-RBA board meeting statement.
The market will see this result was being ‘bullish;’ for a rate rise: the Aussie dollar is now trading close to 86 cents, and seems headed back to the 90 US cent mark because of the superior growth prospects in Australia compared to the US, Japan and Europe.
The NAB said "Business confidence jumped a further 8 points to an overall reading of +18 points – the best since October 2003 and now well above long run average levels.
"The improvement was very broadly based but especially noticeable in retail, finance, manufacturing and recreational & personal services.
"The only sectors to report lower confidence were construction and transport.
"Business conditions edged higher – up 3 points to an overall reading of +4 index points (the best since mid 2008 and approaching long run average readings."
These points are supported by the continuing improvement in the three main performance surveys released in the past week for manufacturing (which turned positive for the first time since early 2008), services (still negative, but on the improve) and construction (a similar outcome).
The NAB said the gains in confidence were broadly-based in the latest survey and are considerably ahead of business conditions which "edged higher" because of "improved trading and profitability results".
The "gains in conditions were mainly due to better results in wholesaling and transport, while most other sectors consolidated recent gains".
But it’s not all bubble and froth and good times for all: the NAB highlighted a couple of niggling problems.
"But weakness re-emerges in employment & forward orders, while capacity utilisation edged lower, it said
