- Alan Oster, NAB chief economist
Australian business confidence recovered modestly in November, while business conditions remained at high levels, signalling a rebound in business investment may be round the corner. According to National; Australia Bank's monthly business survey, business morale rose from 3 to 5 in the reported month. The improvement, while still below the long-run average, was likely due to improved prospects for the Australian economy, outside of mining, being partially offset by the uncertainty towards the global economic environment. At the same time the NAB business conditions index remained at 10 after being revised up from 9 in October, well above the long-term average of 5 points. Business sales inched up two points since October to +18, while profitability increased 3 points to +13 in November, and employment edged two points lower to +1.
Moreover, NAB continues to see no change to the Reserve Bank of Australia official cash rate in coming months, with further easing requiring a "significant deterioration in the economic outlook or a reassessment of growth in the non-mining economy". Last week the RBA decided to maintain the cash rate at 2.0%, but maintained an easing bias, saying that weak inflation has afforded the central bank scope to cut interest rates again if demand should need a boost.
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