Busi­ness buoyed by ris­ing sales

The Australian - - THE NATION - DAVID UREN ECO­NOM­ICS ED­I­TOR

More busi­nesses say their prof­its and sales are im­prov­ing than at any time in at least the last 20 years, while there re­mains no trace of in­fla­tion.

The Na­tional Aus­tralia Bank’s monthly busi­ness sur­vey shows 21 per cent more busi­nesses say trad­ing con­di­tions have im­proved than those who say they are worse, the big­gest mar­gin since the monthly sur­vey be­gan in 1997.

Even in the trou­bled re­tail­ing sec­tor, views about whether con­di­tions are im­prov­ing or not are now evenly split, halt­ing a down­ward trend ev­i­dent since the mid­dle of the year.

Econ­o­mists were cau­tious about plac­ing too much weight on the sur­vey re­sult, not­ing that the big­gest im­prove­ment had come from man­u­fac­tur­ing, which did not seem plau­si­ble.

NAB head of Aus­tralian eco­nom­ics Riki Poly­ge­nis noted the gains ap­peared to be driven by build­ing ma­te­ri­als man­u­fac­tur­ers, pre­dom­i­nantly in NSW, where very strong growth in build­ing and in­fra­struc­ture con­struc­tion was driv­ing de­mand.

“Even if it comes back to Septem­ber lev­els next month, it is con­sis­tent with a very strong trend, broad­en­ing across in­dus­tries,” she said.

Busi­ness con­di­tions are strong­est in NSW but rose in all states ex­cept South Aus­tralia and are at el­e­vated lev­els ev­ery­where ex­cept West­ern Aus­tralia where the num­ber of firms re­port­ing im­proved trad­ing evenly match those suf­fer­ing a down­turn.

A net 7 per cent of firms are in­creas­ing hir­ing, the same level as in Septem­ber.

The Re­serve Bank’s lat­est eco­nomic re­view high­lights strong mea­sures of busi­ness con­di­tions in sup­port of its view that busi­ness in­vest­ment is lift­ing. The NAB sur­vey shows a net 12 per Grail sim­ply ar­riv­ing with a com­pany tax cut. Changes on a can­vas of this kind are not go­ing to drop from any de­part­ment. You will not find them fall­ing from a Trea­sury printer.

“They re­quire imag­i­na­tion — the prin­ci­pal tool that was em­ployed in un­der­writ­ing the 80s and 90s changes.”

Mr Keat­ing said the econ­omy was “cry­ing out for lib­er­at­ing forces” sim­i­lar to those em­ployed dur­ing the 80s and 90s. He said that pe­riod had paved the way for the 26 sub­se­quent years of con­tin­u­ous growth, dur­ing which Aus­tralia’s GDP had dou­bled, ex­ceed­ing the growth of any other ma­jor ad­vanced econ­omy, while real in­comes had risen by two-thirds and the net wealth of Aus­tralian house­holds had risen more than sev­en­fold.

Mr Keat­ing said it would be im­por­tant that Aus­tralia main­tained a com­mit­ment to eq­uity and in­clu­sion as it man­aged the trans­for­ma­tion of tech­nol­ogy. “We can see in Amer­ica to­day what the loss of these bal­ances means, watch­ing the ex­tremes of in­come and wealth rip at the fab­ric of Amer­i­can so­ci­ety.” cent of busi­nesses are in­creas­ing their in­vest­ment.

A smaller num­ber of busi­nesses say they are con­fi­dent that the strong con­di­tions will con­tinue. A net 8 per cent of busi­nesses re­port im­proved con­fi­dence.

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