Business conditions jumped by a record amount in October

You never know what surprises are in store if you get the budget under control and encourage the private sector. Merely a straw in the wind but the direction is right. These are the results from the latest National Bank monthly survey.

BUSINESS conditions jumped by a record amount in October, hitting their highest level since early 2008 on the back of a strong start to the fourth quarter, according to a private survey.

National Australia Bank’s monthly business survey showed a sharp jump in business conditions — the largest monthly increase in the history of the survey — up 12 points on the index, to a reading of 13.

But NAB chief economist Alan Oster said the improvement may still be an aberration, considering the downward trend in business confidence.

The survey showed business confidence continuing to erode, as firms remain uncertain over near-term demand. The index dropped 1 point to a reading of 4, its lowest level since a pre-election jump in mid-2013.

But looking beyond monthly volatility, business conditions still came in with a reading above the long-term trend, Mr Oster said.

While confidence levels vary greatly across industries, the services sector has been the most consistently optimistic.

Mr Oster said despite consumer caution and rising unemployment, it was particularly surprising to see retail conditions lift strongly, up 15 points, albeit to still low levels.

The mining sector also saw an improvement in both confidence and conditions, recording the largest jumps in both, but still remained the sector with the lowest overall conditions reading.

The large jump in business conditions pointed to a strong start to the fourth quarter, Mr Oster said.