Confidence stabilises at high level

SYDNEY - Australian business confidence has bounced back to very high levels despite business conditions softening in January owing to weaker trading and profits, a survey shows.

Confidence appears to be stabilising at "surprisingly high" levels, up 7 per cent to reach an overall reading of plus 15 points, says the latest National Australia Bank (NAB) monthly business survey and economic outlook.

The result largely reverses last month's 11-point fall, with higher confidence most evident in manufacturing, finance and business services and personal and recreational sectors.

However, business conditions fell seven points to plus three index points, reflecting large falls in trading conditions, down 14 to plus three index points while profits were down 10 to plus two index points.

"In terms of business outcomes the survey is clearly signalling a relatively slower start to 2010 from the very high rates of growth in late 2009," NAB said.

"It also appears that the slowing was unanticipated in that the falls were heavily concentrated in sales and profit levels."

Meanwhile labour market conditions were broadly unchanged, down a point to plus six points and global forecasts remain broadly unchanged.

Australian GDP forecasts also remain unchanged at 3 per cent for 2010.

The survey expects unemployment to fall to 4.75 per cent by the end of the year and to 4.15 per cent by the end of 2011.

- AAP