Australia business sentiment soars in November as virus restrictions ease

(Reuters) – A measure of Australian business confidence and conditions surged in November to “above average” as the second-largest state of Victoria emerged from its lengthy virus-induced lockdown and other states opened their borders to each other.

National Australia Bank’s index of business confidence jumped 9 points in November to +12, clocking its fourth straight monthly gain, while conditions surged 7 points to +9.

The conditions index has come a long way since hitting a trough of -34 in April at the height of the coronavirus pandemic and surpassing its long-run average of +6 in November as Australia reopened its economy earlier than expected.

“Encouragingly, other lead indicators improved in the month: capacity utilisation saw a large gain and forward orders turned positive, the latter suggesting that the pipeline of work has begun to build,” said NAB Group Chief Economist Alan Oster.

“That said, there is some way to go before a full recovery is reached,” he added.

While the ‘trading’ and profitability’ sub-indexes climbed in November, the employment index stayed negative, suggesting businesses were still not ready to add new positions.

Forward orders rose to +6, while capacity utilisation jumped to 79.3%.

“What is promising, is that the measure suggests that there will be another large rise in activity in the December quarter,” Oster said.

A strong December quarter would complement a stellar rise of 3.3% in gross domestic product (GDP) growth in the September quarter led by household consumption.