"Business confidence recorded an unexpected increase in the month, with firms apparently shrugging off the sharp deterioration in consumer confidence that followed May's Federal budget"
-Alan Oster, NAB's chief economist
Australian business confidence rose in June, while business conditions reached the highest level in five months as an increase in sales and profits helped companies stay confident following the unpopular federal budget. National Australia Bank's data showed its index of business confidence rose to +8 in June, while index of business conditions inched higher three points to +2, the highest since January. The measure of sales rose five points to +7, while that for profitability advanced six points to +3. Conditions improved across industries, particularly in the construction sector as home building gained momentum. The construction industry posted the strongest conditions and the highest confidence for a second month in a row. However, one component of softness was employment, where the survey's gauge fell to –3 in June, driven by weakness in the mining and wholesale sectors. Economists expect official labour force data for June will show the jobless rate rising to 5.9%, after staying at 5.8% for three months in a row. Also, NAB's survey showed inflation would be no risk to the policy outlook, with companies reporting a moderation in labour costs and purchasing prices. Retail inflation also stayed at low levels in June.
The Australian Dollar strengthened after business confidence data and it may receive even bigger boost from Japan's move to unleash $1.3 billion pension vault on global markets.
© Dukascopy Bank SA