Sales and Profitability of Australia Increased in November 2013

According to a survey, a part of Australian business conditions saw modest growth in November as profitability and sales picked up, which left most sectors comparatively optimistic about the forecast for the next few months.

Sales and profitability of Australia increased A survey of over 600 firms by National Australia Bank (NAB) showed that in November, most of the sectors that are interest sensitive reported better activity while manufacturing and mining sectors benefitted from the lower local dollar.

Though the main measure of business confidence for the report reduced to 5, from October’s 6, the measure was still well above the average for the year 2013.

In November, the index of business conditions for the survey gained a point to -3 while its sales measure turned positive for the first time in more than a year. Though employment took a negative turn in the month, profitability has improved.

Alan Oster, the Chief Economist of NAB said that over recent months, backed by the higher asset prices, less lofty Australian dollar and the environment of low interest rate, business conditions have turned higher.

The index of capital expenditure’s broad based rise is one positive, which raised 9 points to 5 in November which is the highest reading since March, 2012.

This would be welcome news to the RBA (Reserve Bank of Australia) which has been expecting a revival in business investment to negate the drag from a decreasing boom in mining.

In August, there was a cut in the interest rates of central bank to a record low of 2.5 per cent, and amid signs the stimulus slowly working through the economy has been holding steady since.

Oster still believes that rising unemployment and soft domestic demand will lead the RBA to reduce rates again, however, not until May 2014.

The survey also found firms reported that in November, capacity utilization had raised to 79.7 per cent.

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