Australian businesses appear to have navigated global uncertainties relatively well with business conditions and confidence levels markedly higher in March, according to NAB’s latest Monthly Business Survey. Its Business Conditions Index rose from 8 to 12, while the Business Confidence Index rose from 3 to 6. Business conditions are now at an 8-year high and back to pre GFC levels.
UBS referred to the combination of improved business conditions and very low inflation pressures as “a Goldilocks combination which should please the RBA” while ANZ noted the outlook for the business sector “is much more robust now”. JP Morgan said the NAB survey results provide “a reliable signal of the rebalancing that would eventually become evident in GDP and employment data.” NAB said their GDP model now indicates “solid” GDP for Q1 (March quarter) 2016, “with no more cash rate cuts expected.”
Domestic bond markets reacted by sending interest rates higher. Implied yields on 3 year and 10 year bond futures both increased by 5bps to 1.84% and 2.46% respectively.
