Profits, jobs lift

Business confidence weak

AUSTRALIAN companies are experiencing very strong business conditions but their improving profits are not strengthening the broader economy, a new survey shows.

National Australia Bank’s September business survey of business conditions found the construction industry is experiencing the best business conditions while retail remains problematic with conditions in negative territory and trending lower.

While overall business conditions for the month were significantly above the long term average and just below peaks experienced before the global financial crisis, confidence remains weak.

NAB’s survey found business confidence had improved only slightly from a sharp drop in August and appeared to be trending down again.

NAB chief economist Alan Oster said conditions indicated Australia’s business sector was “doing very well”, with the improvement showing in profits and jobs growth.

However investment was “somewhat disappointing”, he said.

“In that context, it will be important to keep an eye on the recent softer trend in business confidence.” Mr Oster said companies were using profits to reduce debt and improve balance sheets in a sign they remain worried about risks.

The stagnant retail sector remains a worry for the broader economy, with NAB’s survey showing it to be lagging far behind every other sector, including mining, construction and manufacturing.