Election boost for confidence

Business confidence surged last month as companies hoped the federal election would put an end to political uncertainty, even though conditions remained weak.

Confidence rose across all states and sectors. Mining companies led the charge, National Australia Bank's monthly business survey showed.

"Mining firms may be gaining some confidence about the minerals and resource rents tax being scrapped under a new government," NAB said.

Record-low interest rates and a falling Australian dollar also played a role in improving confidence, but they were not enough to explain the sixth largest monthly jump in the survey's history, NAB said.

"It is likely that expectations of political change and a decisive [election] result were very important," NAB chief economist, Alan Oster said.

The survey's main measure of business confidence shot up to 6, from minus 3 in July, the highest reading since May 2011.

The Australian dollar rose to about US92.5¢ on the data.

Confidence was still weakest in the mining sector, after a jump from minus 24 to minus 3 on the survey index. Finance, business and property were the strongest sectors with a reading of 12.

Citi's Trade Finance Index showed exporters had experienced a significant turnaround in sentiment.

After forecasting a 3.4 per cent fall in volumes in May, they are now expecting a 5.3 per cent increase next quarter. This is mainly credited to the sharp fall in the Australian dollar since May.

But the surge in confidence was despite a tough trading background - the survey's measure of business conditions improved only marginally to a negative 6 last month from minus 7 in July.

"[Businesses] were certainly changing their expectations, but they weren't changing their capital expenditure plans," Mr Oster said.

He said confidence could often be bounced around by external factors, but conditions were unlikely to change until growth in sales, employment and capital expenditure returned.

The June quarter gross domestic product numbers showed Australia was growing below trend and NAB kept its forecasts unchanged.

It forecast GDP growth to soften to 2.3 per cent this year, before gradually rising to 2.5 per cent next year and 2.9 per cent in 2015.

Unemployment will exceed 6 per cent by the end of the year and peak at 6.75 per cent by the end of next year, the bank said.

The survey of more than 600 companies was taken between August 20 and September 3, when opinion polls indicated the Coalition would comfortably defeat the Labor government.