NAB’s latest monthly business survey has revealed business conditions and confidence improved in February, regaining the momentum last seen in late 2021.
After suffering a fall in January, the business conditions index lifted above its long-term average with an increase of 7 points to +9.
Meanwhile, business confidence also moved above its long-term average with a rise of 8 points to +13, further building upon the rebound that began in January following a sharp fall in December.
“After Omicron caused significant disruption to businesses in January, the latest survey results show things were getting back on track,” said NAB Group chief economist Alan Oster.
“The employment index has improved considerably as the labour market strengthens, after the virus caused many to be unable to work due to illness or isolation requirements at the peak of the recent wave.”
The employment index of NAB’s survey climbed 9 points to +8, while trading conditions lifted 2 points to +10 and profitability gained 3 points to +5.
Business conditions moved higher across all industries except for mining, with the greatest improvements seen in retail (up 15 points) and transport and utilities (up 10 points).
Almost every state saw conditions improve during the month, with the exception of Western Australia due to the state’s delayed border reopening.
The strongest increases to business confidence were recorded for recreation and personal services (up 20 points) and mining (up 18 points) with improvements across every state and territory except WA and Tasmania.
“Confidence continued to improve in February as the threat to the economy from the Omicron outbreak receded,” Mr Oster said.
“That said, the survey for the month was largely completed before the invasion of Ukraine, so we will have to wait to see how big the impact of the conflict will be on confidence.”
Retail price inflation strengthened to 2.1 per cent in quarterly terms, which suggests businesses are passing on higher costs to consumers and may lead to another strong inflation reading for the March quarter according to Mr Oster.
“Overall, the February survey shows that the economy is quickly getting back on track as the Omicron wave recedes,” he said.
“The outlook is fairly strong with supply disruptions and cost pressures now the major challenge facing businesses.”
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
