Australian Business Confidence, Conditions Edge Up in August

SYDNEY--Australian business conditions and confidence edged higher in August despite a worsening outlook for the economy and little guidance at the time on when major cities like Sydney and Melbourne might remove mobility restrictions and reopen.

National Australia Bank's monthly survey of firms showed business confidence rose 2 points to a net balance of -5 in August, while business conditions climbed 4 points to +14 points.

Key Australian cities have been shuttered since June due to the rapid spread of the Covid-19 Delta variant. In response, state governments have moved to ramp up the pace of vaccinations in the adult population, with Sydney likely to reopen in mid-October.

The lockdowns have affected close to 60% of all Australians.

A move to reopen soon is necessary for the economy to avoid recession, with gross domestic product growth in the fourth quarter expected to be a huge negative.

NAB Chief Economist Alan Oster said that despite recent falls in confidence, business has shown resilience in the face of the worsening health crisis.

"While there has clearly been some deterioration in the survey from early 2021, the deterioration in confidence and conditions, as well as capacity utilization, has not been as severe as early 2020," he said.

Forward orders are back to being well above average and investment activity is around average.

"The resilience of the survey during the current episode likely reflects the healthy momentum in the economy before the lockdowns, ongoing fiscal and monetary support as well as greater certainty that the lockdowns will end as vaccines roll out," Mr. Oster added.

Trading conditions rose 7 points to +19 index points in August, and profitability rose 10 points to +15 index points, NAB said.

The survey's employment index fell 2 points to +9 index points in August, but like trading and profitability, it remains above average.

Write to James Glynn at james.glynn@wsj.com


  (END) Dow Jones Newswires
  09-13-21 2144ET
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