KEY POINTS:
SYDNEY - Business conditions in Australia stayed strong in May as mining, construction and finance all enjoyed good growth while even the lagging retail sector became more confident, a private-sector survey showed today.
The National Australia Bank's business conditions index rose to a seasonally adjusted 17 points in May, up from 16 in April and close to the highs of the past few years.
The index measures the difference between the percentage of survey respondents citing good or very good conditions and those nominating poor or very poor.
NAB's measure of business confidence firmed further to 15 points in May, from 13 in April, with construction, retailing and transport the most optimistic sectors.
The index measuring sales dipped a point to 23, while profitability held at a high 17 points and the employment index firmed to 10 points, from 9 in April.
"The key message from the survey is that business continues to report robust levels of business activity and growing confidence," said Alan Oster, group chief economist at NAB.
Mr Oster said the survey confirmed that the acceleration in the momentum of economic growth seen late last year and early this, had continued into the second quarter.
Government figures out last week showed the economy grew a rapid 1.6 per cent in the first quarter, lifting growth for the year to 3.8 per cent.
"Near term, the survey also suggests that momentum will strengthen," he said.
He noted the survey showed little sign of excess stock building in any of the key business sectors.
Capacity utilisation remained high at 83.2 per cent in May, just below February's record peak of 83.9 per cent.
Yet cost and wage pressures were constrained.
"Despite the strength of business conditions and rising confidence levels wage and price outcomes have not deteriorated -- consistent with other suggestions that the supply side of the economy has improved recently," Mr Oster said.
The survey pointed to ongoing moderate rates of economy-wide price inflation in May -- up 0.5 per cent at a seasonally adjusted quarterly rate, compared to 0.6 in April. The annual rate of change was steady at 2.6 per cent.
Retail price inflation increased by 0.4 per cent at a seasonally adjusted quarterly rate, compared to 0.7 per cent the previous month. As a result, NAB's measure of annual retail inflation remained unchanged at a still-low 2.1 per cent.
- REUTERS
