Australia’s Business Sentiment Rebounds as Omicron Wave Eases

(Bloomberg) — Australian business sentiment strengthened in February as an outbreak of the omicron variant of coronavirus dissipated, easing supply-chain disruptions and reviving demand. 

Business confidence jumped to 13 points from a revised 4 in January, recording gains across all industries, a National Australia Bank (OTC:) Ltd. survey showed Tuesday. Business conditions — measuring hiring, sales and profits —  climbed to 9 points from a revised 2 to be back above its long-run average. 

The poll was largely concluded before Russia invaded Ukraine, NAB said.

Australia’s economy was hit by the omicron outbreak through December-January as the country shifted to trying to live with the virus, prompting widespread sickness among employees. Still, the labor market held up relatively well through the period, with the jobless rate remaining at 4.2%.

“The employment index has improved considerably as the labor market strengthens, after the virus caused many to be unable to work due to illness or isolation requirements at the peak of the recent wave,” NAB Chief Economist Alan Oster said.

The survey underscores that the A$2.2 trillion ($1.6 trillion) economy is on a swift path to recovery, prompting financial markets to bet interest rate hikes will begin as soon as June. Data on Monday showed job vacancies are at a new pandemic-era high, signaling the labor market is poised to tighten further.

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The survey showed business conditions improved across the board, with large gains in retail and transport and utilities. Forward orders, a gauge of future demand, advanced by 4 points to 9 while capex climbed by 5 points to 8. 

The survey also pointed to an inflationary impulse in the economy, with retail price growth rising above 2% in February, suggesting businesses are passing on higher costs to consumers.

©2022 Bloomberg L.P.

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