- Rikki Polygenis, NAB's head of Australian economics
Australia's business confidence held up in light of the ongoing turmoil on financial markets around the world. According to NAB's monthly business survey, business confidence remained unchanged at 2 last month, with the measure being choppy last year, partly due to volatility on money markets and concerns about China's economic growth. However, business conditions deteriorated, with the corresponding gauge falling to 5 in January from a revised 6 in the prior month, but the measure remained comfortably above its long-term average of 1. While low interest rates continues to support the domestic economy in a period of transition away from a commodities boom, general business sentiment has also improved since Prime Minister Malcolm Turnbull assumed the leadership last September.
At the same time, Australian consumer confidence rebounded this month, a sign domestic demand will continue to shore up the economy this year. The Westpac Consumer Sentiment Index soared 4.2% from 97.3 last month to 101.3 in February, the highest reading since November. The report also showed that that people's assessment of their family finances over the next year was also strong, up by 3.8% for the month. Low inflation and interest rates are likely to contribute to improvement of consumer moods.
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