- Alan Oster, NAB's chief economist
Even though Australia's business confidence faded in October amid financial market volatility and concerns over emerging markets, business conditions remained strong with sales, profits and employment all in green territory. According to National Australia Bank's survey of around 400 firms, the index of business conditions was unchanged at 9, whereas the business confidence gauge declined form 5 in September to 2 last month. A reading above zero indicates improvement in conditions, while a reading below zero shows deterioration. NAB's report showed the outperformance of sectors most exposed to a weaker Australian Dollar and all-time low interest rates. The survey sub-index of sales edged up to a historically high +15, while profitability measure lost a point to +8. Additionally, the sub-index of employment held at +3, the highest since 2011. The outlook for non-mining business investment remained upbeat with the corresponding measure falling by a point to +6 and above its long-term average.
The RBA made minor adjustments to its growth outlook last week, revising its 2015 forecast by 25 basis points to 2.25%, but leaving its 2016 estimate unchanged at 2%-3%. Economists expect rates to remain on hold throughout next year, with only a downgrade of GDP growth forecast from 3% to 2.50% triggering rate cut.
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