(Bloomberg) -- Australian business confidence surged to the highest level since 2010 and firms' conditions advanced further, signaling economic growth could accelerate.
The sentiment index jumped seven points to 13 last month, according to a National Australia Bank Ltd. survey of more than 400 firms conducted April 21-28. The business conditions gauge -- a measure of hiring, sales and profits -- climbed to 14 from a revised 12, driven mainly by employment, NAB said.
“Importantly, the survey points to an ongoing improvement in employment conditions, which is a trend that is critical to the likely path of the Reserve Bank of Australia's cash rate,” said NAB Chief Economist Alan Oster. “Consequently, we remain confident in our outlook for economic growth to accelerate in the second half of 2017.”
Australia's central bank has stood pat on policy in recent months to see how a weak labor market played out and as further easing was constrained by red-hot east coast property prices. A strengthening jobs market and improved confidence could draw a line under an easing cycle that's seen the RBA cut interest rates to a record-low 1.5 percent as the economy transitions away from mining and toward services and manufacturing.
“The longer-term economic outlook is somewhat less certain, however, as important growth drivers, such as LNG exports, commodity prices and housing construction, begin to fade,” Oster said. “Despite that, the RBA's emphasis on financial stability concerns are expected to keep them on hold for the foreseeable future.”
To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net.
To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Chris Bourke
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