SYDNEY – A measure of Australian business conditions showed a welcome improvement in August as the coronavirus lockdown weathered sales and profits in parts of the country, with hopes of a rapid recovery once restrictions are eased.
Tuesday’s survey by National Australia Bank showed that the Index of Business Conditions rose 4 points to +14 in August, part of a sharp 14-point drop in July.
The survey’s confidence measure rose 2 points to -5 after diving in July as the lockdown stretched from Sydney to Melbourne and Canberra.
Importantly, the condition index remained well above the long-run average and trading was much better than last year’s first round of lockdown.
“The resilience of the survey during the current episode reflects the healthy momentum in the economy before the lockdown, along with ongoing financial and monetary support, as well as greater certainty that the lockdown will end,” said Alan Oster, chief economist at NAB.
“While we expect a major hit to activity in the third quarter, the survey supports our view that once restrictions are eased, activity will resume.”
The Reserve Bank of Australia (RBA) also argued last week that the economy could recover quickly after the end of the lockdown and forecast strong growth for the next year.
The easing of rules is expected to begin around mid-October when more populations are vaccinated, though different states have different views on when to open up completely.
A separate survey of ANZ consumers on Tuesday showed that New South Wales’ plan announced last week had an immediate effect, with confidence in the state jumping 10.6 percent.
This helped boost sentiment nationally to 3.1 per cent as the mood of consumers improved in their own financial health and the economy in general.
The NAB survey showed consumers were still buying as its sales measure increased from +12 in July to +19 in August, while profitability jumped from +5 to +15.
The employment index fell 2 points to +9, although that too was above the long-term average.
Forward orders rose sharply to +6, but capacity utilization dropped back to 80.0 percent, indicating a significant lull in the system.
The NAB survey was conducted from 17-30 August.
by Wayne Cole
This News Originally From – The Epoch Times