Australia’s business conditions, confidence rise strongly in January

Australia’s business conditions and sentiment increased solidly in January, consistent with rebounding surveys throughout Australia and globally. The report details also came in solid. This implies that the Australian business sector is starting 2017 on a strong footing, and that growth is expected to improve after the recent softness, noted ANZ in a research report.


Australia’s Business conditions index rose sharply by six points to 16.2 in January from December’s 9.9, starting this year with a bang, with overall conditions rising for the second straight month to the highest level since 2007. The surge in business conditions data affirms the view that the Australian economy is in fundamentally good shape. The unexpected softness recorded in the third quarter GDP might be just temporary.


The affirmative view is underpinned by the report’s underlying details. The employment index seems to have bottomed and risen in January to the highest level in more than five years. Business profitability is also at higher levels and implies that the future employment growth outlook is strong, following the flat patch toward the end of 2016, noted ANZ.


The divergence in conditions throughout industries is the only real downside to the report. Even if conditions rebounded throughout most industries in January, certain sectors continue to be weak. The mining sector has witnessed some recent rebound due to solid commodity prices; however, it stays subdued as investment continues to decline. In the meantime, the retail sector continues to struggle from increased competition.


Meanwhile, Australia’s business sentiment has also risen strongly in January. The index rose from December’s 5.7 to 9.8 in January. The recent rebound in global PMIs and improved domestic trading conditions are expected to have underpinned the strong jump in Australia’s business sentiment.


At 6:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar neutral at 28.74, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -18.78


Source:Economic Times