Business conditions improved a little in January, as the global economic outlook begins to look a bit better, a survey shows.
The National Australia Bank (NAB) Business Survey, released on Tuesday, showed business conditions moved into positive territory, posting a rise of two index points to plus two points in January.
Business confidence rose one point to plus four points.
NAB said business confidence was relatively firm in January, but employment was still a problem.
“Labour market conditions remain soft and the overall outlook for near-term activity remains moderate,” the NAB said in a statement accompanying the survey on Tuesday.
“Profitability deteriorated in the month, while employment and trading conditions were unchanged,” the NAB said.
The survey’s report said heavy falls in conditions in wholesale, transport and utilities, and construction sectors were broadly offset by improvements in mining, manufacturing, and recreation and personal services.
JP Morgan economist Ben Jarman said the NAB business confidence index had a small rise but business conditions were still difficult in January.
“It seems that firms are taking some comfort from the better vibes of the global economic and financial markets climate that has prevailed so far through the new year,” he said.
“The details of the conditions index, though, tell a different story, with many categories stagnant at low levels or losing further ground in January.
“In particular, the rebound in Australian dollar to back near prior highs seems once more to be testing the resolve of trade-exposed sectors outside mining.”
NAB economists said the surprisingly good recent US economic data was encouraging and suggested a moderate recovery was underway in America.
However, the global economic story is different elsewhere.
“The euro zone appears to have entered recession, while emerging economies continue to show signs of slowing,” the statement said.
“We continue to see global growth softening to around three per cent in 2012, a below-trend outcome highly dependent on the emerging economies as the OECD (Organisation of Economic Co-operation and Development) faces a long period of modest growth,” the NAB said.
The bank said it had changed its cash rate forecast after the RBA kept it on hold at its February meeting.
The NAB said there may just be room for one further RBA cut towards the middle of 2012, most probably in May.
“Thereafter, we see the cash rate unchanged until mid-2013 when rates will be under upward pressure from wages and a strengthening labour market,” the NAB said.
