Business confidence has rebounded from near two year lows amid lower interest rates and an end to Tony Abbott's leadership uncertainty.
National Australia Bank's confidence barometer bounced three points in March after February's slump to zero, when uncertainty over the prime minister's leadership offset any positive impact from the Reserve Bank's rate cut.
"Any positive impact on confidence from the RBA's February rate cut was likely eroded by offsetting factors - such as the government's leadership spill - but, some of these factors have begun to fade," NAB's economists said on Tuesday.
A rise in mining confidence in March helped lift NAB's overall measure, but the retail sector's score dipped into negative territory for the first time in two years as uncertainty over government policy made consumers anxious, NAB said.
That was surprising given the recent slide in iron ore prices and solid monthly retail sales figures, ANZ economists said.
Confidence remained well below its long term average, and next month's federal budget could deliver a further blow, they said.
"Increased political stability (if sustained) will be welcomed by businesses, although ongoing uncertainty around the economic outlook is likely to continue to hold back business sentiment," ANZ economists said.
"On this front, the budget and its reception will be very important."
NAB's monthly business survey also showed business conditions flourished in March, jumping from two points to an above-average six - one of the stronger results of the last few years, JP Morgan economist Ben Jarman said.
But NAB economists said improved conditions were very much a recent development and would need to be repeated for several months before being taken seriously.
"The big picture in Australia is still one where the non-mining sector is struggling to offset the impact on domestic demand of sharply lower mining investment," they said.
Mr Jarman said the figures suggested the falling Australian dollar was giving business conditions a boost, while domestic demand was being buoyed by lower oil prices.
"Since the RBA began cutting rates three-and-a-half years ago, there have only been two stronger monthly results for business conditions," he said.
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