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.