Businesses are the most confident they have been for more than two years, with corporate sentiment buoyed by growing evidence of the national COVID-19 economic comeback, tumbling interstate borders and Victoria’s much-delayed reopening.
NAB’s business confidence index lifted for the fourth consecutive month in November, climbing nine points to 12 points, pushing above the long-term average and far higher than the “neutral” zero level which represents a balance between optimists with pessimists. The index dropped to more than 60 points below zero at the height of the pandemic but has since recovered at a rapid pace, and now sits at its highest level since January 2018.
NAB chief economist Alan Oster said the survey results would have contained some “snapback” among Victorian firms enjoying the much-delayed easing of restrictions, but that the survey nonetheless continued “to suggest a rapid rebound in the economy as restrictions are eased and state borders open up”.
The bank’s surveyed business conditions index also climbed seven points in November to a 20-month high of nine points.
As businesses slowly rebuild the confidence to invest and hire in greater numbers, ANZ’s weekly survey shows consumers are the most upbeat they have been this year, with the sentiment gauge pushing up 1.7 per cent to 109.3 points ahead of the key Christmas period.
“This is the first time in 18 months that confidence is higher than it was a year prior,” ANZ head of Australian economics David Plank said. “We believe that this bodes well for year-end spending.”
NAB’s business survey highlighted how despite the evident V-shaped recovery over recent months, firms continued to operate below their full potential and remained leery of adding staff, with survey questions gauging that investment and hiring intentions remained negative.
This was despite a “solid” lift in the capacity utilisation index, which increased 1.4 percentage points to a still-below-average 79.3 per cent.
The soft underbelly of the business survey showed that “despite a large rebound over the last six months, we are not yet fully recovered,” Mr Oster said. Nonetheless, he said the strong lift in capacity utilisation pointed towards “another large rise in activity in the December quarter — a nice follow-up to the solid rebound we saw in the (third-quarter) national accounts last week” — which showed the economy grew at its fastest pace in 45 years over the three months to September.