The National Australia Bank (NAB) reported in its June monthly business survey that business confidence has lifted from +8 to +10. This is the highest business confidence level since the September 2013 election of Tony Abbott. Furthermore, the NAB has also reported that confidence is positive in all industries with the exception of mining, which did rise to 0.
In addition to the rise in business confidence, the NAB also reported that the business conditions index has risen from +5 to +11 over the past month. That is the highest level since last October.
Business Confidence And Low Interest Rates
This growing positivity is due among other factors to low interest rates and a pro-business Australian government that has offered PPI to protect investments. Low interest rates have helped the housing market recover as well as investors striking at new projects.
Due to the increased confidence rating, the Australian dollar has risen from 73.9 cents to 74.3 cents on the US dollar.
But while these signs point to an improving Australian economy, concerns remain. The NAB noted that there remains variety in the confidence level of various industries. While the services industry has boomed, wholesale and manufacturing have risen but could still improve. And while the economy may have picked up, this has not led to a decrease in unemployment.
The Chinese economic slowdown could also threaten this increased confidence. Weakening Chinese demand for minerals and resources have hurt the Australian mining industry. Iron ore prices have dropped, and Chinese investment in Australian resource extraction efforts has fallen to their lowest in almost a decade.
Greece May Shake Confidence
In addition, the turmoil in Greece could also shake Australian business confidence. The NAB survey noted little Australian reaction to the Greek crisis, but the survey was taken before the Greek referendum over European bailout demand conditions was announced.
As the mining boom which has fueled Australia’s economy over the decade appears to be fading, the country is slowly adjusting. Chief NAB economist Alan Oster observed that “The economy is becoming increasingly reliant on an upturn in non-mining investment to drive growth and productivity.”