Australian business confidence maintained gains in January as a better outlook in China and central bank interest-rate reductions at home helped boost sentiment, a private survey showed.
The confidence index for January rose to 3 from a revised 2 in the month prior, according to a National Australia Bank Ltd. survey released today of more than 400 companies taken Jan. 25- Feb. 4. The business conditions gauge, a measure of hiring, sales and profits, improved to minus 2 from a revised minus 5.
Reserve Bank of Australia Governor Glenn Stevens and his board cut the benchmark rate to 3 percent in December, matching the level reached from April-October 2009 that was the lowest since 1960, before pausing this month as the global outlook brightened. China’s gross domestic product increased 7.9 percent in the last three months of 2012 from a year earlier, the first acceleration in eight quarters.
The “recovery mainly reflects external factors, including the rally in global equity markets and generally better activity in China, as well as recent RBA cuts,” NAB Chief Economist Alan Oster said in the report. “However confidence remains below long-run average levels.”
Australia’s benchmark stock index gained 14.6 percent in 2012 and the MSCI World Index rose 13.2 percent over the period.
U.S. lawmakers approved a measure in early January averting tax increases and spending cuts that threatened to send the world’s biggest economy into recession.
Traders are pricing in a 56 percent chance the RBA will reduce rates by a quarter percentage point to a record-low 2.75 percent when the board meets next month, according to swaps data compiled by Bloomberg.
“Business conditions were generally better across interest sensitive industries in January, but fell heavily in mining,” Oster said, while noting that it was difficult “to separate out any impact of the Queensland floods.”
In January, the northeastern state of Queensland suffered flooding for the second time in about two years.
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