Source: Daniel Munoz/Reuters
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  • A measure of business conditions has shown a welcome improvement in August as both sales and profits managed to weather lockdowns
  • The survey from NAB indicated its index of business conditions rose four points to +14 in August, recovering part of July’s steep 14-point drop
  • The measure of confidence, however, edged up only two points to -5, after dropping in July as lockdown’s spread
  • It’s expected that restrictions will be eased slightly in mid-October when more of Australia’s population is vaccinated

A measure of business conditions in Australia has shown a welcome improvement in August as both sales and profits managed to weather lockdowns in parts of the country, offering hope of a speedy recovery once the current restrictions are lifted.

Today’s survey from National Australia Bank — conducted from August 17 to 30 — indicated its index of business conditions rose four points to +14 in August, recovering part of July’s steep 14-point drop.

The bank’s measure of confidence, however, edged up only two points to -5, after dropping in July as lockdowns spread from Sydney to Melbourne and Canberra.

“The resilience of the survey during the current episode likely reflects the healthy momentum in the economy before the lockdowns, ongoing fiscal and monetary support as well as greater certainty that the lockdowns will end as vaccines roll out,” NAB’s chief economist Alan Oster said.

“While we expect a large hit to activity in Q3, the survey supports our view that once restrictions are eased, activity will rebound.”

Last week, the Reserve Bank of Australia argued that the economy could recover quickly once the restrictions were over and even forecast strong growth next year.

It’s expected that restrictions will be eased slightly in mid-October when more of Australia’s population is vaccinated, but different states have different views about when to fully open.

A separate survey by ANZ showed that New South Wales’ plan to re-open — unveiled last week — had an immediate impact, with confidence jumping 10.6 per cent in the state.

That boost helped to lift the broader national sentiment by 3.1 per cent as consumers grew more optimistic about their own financial health and the economy in general.

The NAB survey also showed that consumers were still shopping, with its measure of sales jumping to +19 in August from +12 in July, while profitability firmed to +15 from +5.

However, the employment index fell two points to +9, though that was also above the long-run average.

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