Australian business conditions reach all-time highs in May

Australian business conditions continued to build in May according to National Australia Bank’s (NAB) index, in a sign that the economy has the momentum to cope with a COVID-19 lockdown in Victoria.

NAB’s index of business conditions climbed 5 points to +37 last month – a record high in May – after an 8-point jump in April, with strength reported across all industries.

“Conditions rose further, and in particular trading conditions are at a massive +47 index points,” said NAB chief economist Alan Oster.

“Confidence was slightly softer but remains very high and the pipeline of work as measured by forward orders held at a high level,” he added.

The survey measure for trading (or sales) rose 6 points to reach +47, while profitability gained 6 points to +40 and employment added 5 points to +25. Capacity utilisation dipped slightly to a still high 85.1% and forward orders held firm at +26.

“This was another very strong read for the business sector and forward indicators point to ongoing strength in the near-term,” said Oster. “The economy now appears to be entering a new period of growth after a very rapid rebound.”

Recent economic data revealed Australia’s GDP grew by 1.8% in the first quarter of the year to reach its pre-pandemic levels.