Business conditions improve thanks to Government handouts

Business conditions improved in April as Government cash handouts helped to lift the retail sector.

NAB’s monthly business outlook revealed business conditions improved seven points to -10 points, indicating the recent decline in business conditions has at least temporarily stabilised.

But the index of business confidence fell one point to -14 points, although NAB’s chief economist Alan Oster says confidence also seems to have stabilised above the levels seen in early 2009, when many businesses feared the global economy was near collapse.

The indices for trading results and profits rose, while readings on employment, forward orders and capacity utlisation also improved.

“There is little doubt that the results of the April survey represent the most encouraging set of numbers for some time,” Oster said in a statement.

“While it is perhaps unwise to put too much emphasis on one month’s results, the survey does seem to point to a stabilisation of confidence at levels around those reported in late 2008 and early 2009 – that is, at levels significantly above the ‘fear driven’ readings of January and February.”

Oster says the while the Government’s stimulatory measures have provided a boost for retail and related sectors (such as transport and wholesale) it appears that the sharp falls in demand seen in the last six months are easing.

But he says the outlook for employment looks worrying, with the outlook for big employing sectors of the economy such as manufacturing, mining and financing still deteriorating. 

“Overall the key message from the survey on employment is that the pace of job loss has slowed rather than a fundamental change in the prospects for rising unemployment.”

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