NAB business survey goes pop

Running hard now on catch-up growth:

Business conditions rose further in December to its highest level since late 2018 at 14pts. This marks a fourth consecutive month of improvement and, encouragingly, employment conditions are back in positive territory for the first time since the start of the pandemic. Business conditions are now well above average, suggesting there is strong momentum in Australia’s economic recovery. In contrast, business confidence fell back to 4pts, as confidence pulled back in NSW, Victoria and Queensland. In part, this likely reflects the impact of the Sydney COVID-19 outbreak through December. Elsewhere, capacity utilisation saw further gains and is now around its long-run average (and pre-virus levels), while forward orders pulled back but remain in positive territory. These leading indicators suggest the pipeline of work continues to build – pointing to an ongoing recovery in the months ahead. Most indicators within the survey are now broadly at or above pre-virus levels, with the exceptions being export conditions – no surprise given the pandemic continues to disrupt global trade – and capital expenditure. That said, capex has been recovering since reaching a trough in mid 2020 and, should conditions remain elevated, will likely turn positive again as businesses renew investment plans, especially given government tax incentives in place.

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