"With business activity seemingly on the rise, business may be able to maintain confidence at these levels for longer"
- Alan Oster, NAB chief economist
Australia's CB Leading Index rose 0.2% in May following the downwardly revised 0.2% decline a month earlier. Four of the seven components in the leading index increased, including sales to inventories ratio, yield spread, gross operating surplus and money supply. Building approvals and rural goods exports, however, fell, while share prices remained unchanged in May.
Separately, a survey from National Australia Bank showed that business confidence declined for the second consecutive quarter, but remains resilient as conditions improve, largely shrugging off the tough federal budget. Business conditions over the next 12 months were steady at +24 in the second quarter, while the gauge of current conditions rose a point to +1 and the employment index jumped to 0 from –5. Business confidence declined form 7 to 6 points, but still well above –1 points seen in the second quarter of 2013. NAB said low interest rates were helping to boost activity in some sectors of the Australian economy, with property and construction reporting the highest levels of confidence and likely to remain a source of support. However, the impact of the high Australian currency was mixed, NAB added. While trade-exposed sectors say the currency is a headwind and will welcome weaker Aussie Dollar, retailers and wholesalers are benefiting from reduced purchase costs.
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