World Economy

Australia business conditions fall from highs in February: Survey

Brendon Thorne | Bloomberg | Getty Images

A measure of Australian business conditions fell from decade highs in February as sales unwound some surprisingly strong gains the month before, though activity remained above average across most sectors.

National Australia Bank's monthly survey of more than 400 firms showed its index of business conditions dropped 7 points to +9 in February, but stayed above the long-run average of +5.

All sectors except retail reported positive conditions in February.

The survey's measure of business confidence dipped 3 points to +7, but again was high historically.

"Business conditions are still at quite lofty levels, consistent with our expectation for the economy to enjoy solid rates of growth in the near-term," said NAB's chief economist, Alan Oster.

The economy grew a faster-than-expected 1.1 percent in the fourth quarter of last year, underpinned by strength in consumer and government spending and home building.

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That performance has encouraged the Reserve Bank of Australia (RBA) to keep interest rates steady, while keeping a wary eye on the risk of overheating in housing markets in Sydney and Melbourne.

The main pullback in the NAB survey for February came in its index of sales which retreated 10 points to +13, having doubled in January. Its measure of employment dipped 2 points to a still solid +5.

"Employment conditions are notably higher so far this year, despite pulling back a little in February, and suggest better labour market conditions than the official labour force survey," said Oster.

The index was consistent with job growth of around 18,000 per month, he said, which was enough to nudge the unemployment rate lower over time.

The jobless rate stood at 5.7 percent in January, and has not strayed far from there in the past year.