Australia business activity climbs to fresh highs in May-survey

People walk through the Central Business District (CBD) at dusk in Sydney, Australia, June 4,…

People walk through the Central Business District (CBD) at dusk in Sydney, Australia, June 4, 2021. REUTERS/Loren Elliott

A measure of Australian business conditions extended its blistering run to reach all-time highs in May with sales, profits and employment all up strongly, a sign the economy has the momentum to cope with a coronavirus lockdown in Victoria.

National Australia Bank’s (NAB.AX) index of business conditions climbed 5 points to +37 in May, after jumping 8 points in April, with strength reported across all industries.

The survey’s measure of confidence eased 3 points to +20, though that was still high historically.

“Conditions rose further, and in particular trading conditions are at a massive +47 index points,” said NAB chief economist Alan Oster.

“Confidence was slightly softer but remains very high and the pipeline of work as measured by forward orders held at a high level.”

The survey measure for trading, or sales, rose 6 points to reach +47, while profitability gained 6 points to +40 and employment 5 points to +25.

Capacity utilisation dipped slightly to a still high 85.1%, after surging in April, while forward orders held firm at +26.

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

Data out last week showed gross domestic product (GDP) grew a brisk 1.8% in the first quarter of the year to reach its pre-pandemic levels.

The NAB survey was conducted from 18-28 May, catching just the start of the Victoria lockdown on May 27 which will likely have some dampening impact on consumer spending.

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