The bank said it remains cautious of how sustainable this improvement is, however, with business confidence experiencing a further decline and capacity utilisation seeing only a marginal improvement.
NAB said the fall in business confidence was surprising given that employment rose 0.2 per cent during the month.
The employment rise was offset by an increase in the participation rate, however, leaving the unemployment rate unchanged at 6.2 per cent.
“This is the first time since 2012 that confidence has dropped below conditions, suggesting firms remain uncertain over near-term demand in their industry,” said NAB.
The bank said confidence levels vary greatly across industries but that the services sector has consistently been the most optimistic.
“To complete the mixed messages about the future, forward orders improved significantly but conditions in the ‘bellwether’ wholesale industry are still quite weak,” said NAB.
According to the survey results, retail conditions saw a strong increase into positive territory for the first time in four and a half years.
NAB said it is too early, however, to be confident that stronger growth in consumer spending is about to become entrenched.
Engineering construction in mining increased and business credit demand has improved, but there are signs that the building construction cycle has begun to turn down, according to the research.
While jumps in Australian business conditions point to a strong start in the fourth quarter, the bank said growth continues to be constrained.
NAB said GDP forecasts are up slightly for the 2014/2015 financial year, from 2.8 per cent to 2.9 per cent, and remain unchanged at 3.2 per cent for the 2015/2016 financial year.
