Melbourne COVID-19 outbreak dampens outlook.

 

Australian business conditions showed a sharp recovery in activity and confidence in June but the fresh outbreak of COVID-19 in Melbourne has put a cloud over future prospects. 

 

Trading, profitability, forward orders and employment intentions, all surged in June as restrictions across the country had started to relax and power up business activity, according National Australia’s Bank’s latest business survey.

 

NAB’s index of business conditions bounced to -7 in June, from -24 in May and -34 in April. 

 

These figures are a lot nearer to the long-run average of +6 and away from lows seen during the global financial crisis.

 

“Business confidence turned positive after rebounding sharply from record lows over the past three months,” Alan Oster, NAB chief economist, said.

 

“Nonetheless, while the rebound has been significant, conditions remain deeply negative and well below average – reflecting the fact that activity still has some way to go before a full recovery can be declared,” Oster said.

 

Mining and retail led the gains, with services still lagging due to social distancing requirements and a lack of tourists.

 

“The survey was conducted just prior to the reintroduction of lockdowns in Victoria – so we will be closely watching next month’s survey to see how confidence and conditions are again impacted,” Oster added.