Australia Business Confidence Surges to Highest in 3 1/2 Years

Australian business confidence surged in September to the highest level in 3 1/2 years as majority government and lower interest rates encouraged companies, even as employment conditions remained poor, a private survey showed.

The confidence index jumped to 12 from 4, according to a National Australia Bank Ltd. survey released today of more than 400 companies taken Sept. 24 to Sept. 30. The business conditions gauge, a measure of hiring, sales and profits, was minus 4 compared with minus 7 in August.

The result reflects the restoration of majority government in Australia after three years of a hung parliament and record-low borrowing costs as the central seeks to engineer a transition from mining investment to industries including residential construction. Tony Abbott’s coalition ousted the Labor government on Sept. 7 pledging to cut red tape and lower taxes to boost the $1.5 trillion economy.

“The federal election result appears to have helped confidence further,” NAB Chief Economist Alan Oster said in the report. “Nonetheless, employment conditions remain subdued, painting a soft outlook for the labor market.”

The local dollar has declined 9.2 percent this year as the Reserve Bank of Australia reduced rates to a record low 2.5 percent, helping ease pressure on industries including manufacturing and services.

Australia’s unemployment rate probably held at 5.8 percent in September, a four-year high, economists predicted before government data due to be released Oct. 10.

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.