April 15, 2011 – A survey showed that subsequent to the impact of the Queensland floods, business conditions suggest the Australian economy is showing signs of recovery.
As shown by the National Australia Bank Business Survey for March, business conditions increased 11 points to plus nine index points, shifting above the zero level that separates expansion from contraction.
In a statement accompanying the survey, NAB said that since March 2010, the overall business conditions index is now at its highest level. However, conditions in Queensland improved considerably in the month but are still very poor.
This occurred after the International Monetary Fund yesterday cut off 0.5 per cent from Australia’s growth this year due to the floods. However, it has been predicted to pick up to the long-term trend rate of 3.5 per cent next year.
The bank also added that though business national confidence declined in March; however, it stayed in a positive outlook and remained above trend.
In March, the business confidence index dropped five points to plus nine points.
According to NAB that in the March quarter, the Australian economy was estimated to have stalled because of the floods and Cyclone Yasi, with coal exports still weak in February.
The survey’s report said that NAB survey conditions progressed sharply at the end of the quarter and may signal a projected recovery from mining investment, flood reconstruction, and income effects of commodity prices.
The forward orders expanded in March with a rise to plus three index points, from minus four in February was also shown in the survey.
In March, the capacity utilization rate was up 0.4 points to 81.5 per cent.
NAB still anticipates that the Reserve Bank of Australia (RBA) will next raise the cash rate to five per cent from 4.75 per cent in August, and then another quarter of a per cent increase in November.
