Mining leads charge as business confidence surges: NAB
Business confidence surged in August as firms hoped the federal election would put an end to political uncertainty, even though business conditions remain weak.
Confidence rose across all states and sectors, with mining firms leading the charge, according to the National Australia Bank's monthly business survey. "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 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's chief economist, Alan Oster, said.
The survey's main measure of business confidence shot up to 6, from -3 in July, the highest reading since May 2011.
The Australian dollar inched up to be trading around US92.5¢ on the data. Confidence was still weakest in the mining sector, after a jump from -24 to -3 on the survey index.
Finance, business and property were the strongest sectors, with a reading of 12.
According to the Citi Trade Finance Index, exporters have experienced a significant turnaround on sentiment.
After forecasting a 3.4 per cent fall in volumes in May, exporters are now expecting a 5.3 per cent increase in the next quarter.
This is mainly credited to the sharp fall in the Australian dollar since May.
But the surge in confidence came despite a tough trading background, with the survey's measure of business conditions improving only marginally to -6 in August, from -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's held its forecasts unchanged.
NAB forecast GDP growth to soften to 2.3 per cent in 2013 before gradually rising to 2.5 per cent in 2014 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 end of 2014, NAB 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.