NAB Business Survey Finds Outlook Upbeat

national australia bankAccording to the latest survey carried out by the National Australia Bank (NAB), businesses in Australia are optimistic in their outlook towards the economy and investment prospects. A quarterly survey carried out by NAB has revealed that Australian businesses have not been affected by the volatility in global markets and are revising their expectations in a positive outlook based on local conditions.

The survey also indicates that a revival of the non-mining sector is on cards. The bank said that the results were in line with the momentum which had been reported in its monthly reports.

In a statement, Alan Oster NAB chief economist said

Persistent market volatility could eventually start to have an impact on the economy via sentiment channels. But, at this stage, firms actually appear more optimistic about the outlook. Firms are actually telling us that they not only remain quite upbeat about the outlook, but they have revised up their expectations relative to last quarter

Oster said that this optimistic view bode well for the labor market and future investment in Australia. According to Oster, business confidence remained positive in the current quarter with the index of business conditions reporting an increase of 2 points going up to 15 in the coming three months. The outlook for the next 12 months was also upbeat, with the index rising by 2 points to a robust 26.

The survey has indicated an increase in capex plans and capacity utilization for the next quarter which signals a positive outlook for non-mining sector investment. Oster also pointed out that stronger employment trends indicate an improvement in the labor market.

The Reserve Bank of Australia (RBA) has been pushing for a revival in non-mining sectors to counter the recent reversals faced by commodities sectors due to dropping prices.

Consumer prices have remained low with the survey reporting that 67 percent of its respondents expect an inflation of 3 percent. Official estimates of the consumer price inflation is expected to be released next week and will most probably report that inflation remained under 2 percent in the first quarter of 2016.

According to the survey, business conditions have eased a little in the current quarter but have remained high post the global financial crisis and are much higher than the long-run average.

NAB has predicted a steady growth in the GDP for the first quarter of the year based on business conditions of the past few quarters.