Australia Enters New Growth Period as Business Conditions Surge

(Bloomberg) -- Australia’s economy appears to be entering “a new period of growth” with a survey of business conditions reaching a record high in May, led by the employment, profitability and trading sub-components.

The conditions index -- which measures hiring, sales and profits -- advanced to 37 from 32 in April, National Australia Bank Ltd. said Tuesday in a statement. Business confidence eased to 20 in May from a downwardly revised 23 in April.

“The strength in activity should see further gains in employment and with high rates of capacity utilization and elevated confidence, we hope that business investment continues to lift,” said Alan Oster, chief economist at NAB. “This could see further activity and productivity gains as the private sector takes over once again as the government gradually withdraws stimulus.”

Australia’s rapid rebound has been underpinned by its ability to limit Covid-19 outbreaks, boosting consumer and business sentiment. A massive fiscal-monetary injection strengthened the financial position of households and firms during the lockdown, and consumers are spending and companies hiring.

Australia’s economy has now recouped all jobs lost during the pandemic and is larger than it was before Covid hit.

“Overall, this was another very strong read for the business sector -- and forward indicators point to ongoing strength in the near-term,” Oster said. “The economy now appears to be entering a new period of growth after a very rapid rebound.”

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