In its latest forecast for the Australian economy, NAB said the downturn in mining appears to be deepening, but the recovery across the non-mining economy is “on track or could be accelerating further”.
NAB's monthly business survey for March recorded a jump in business conditions equalling the levels recorded in early 2008.
NAB chief economist Alan Oster said the increase in business conditions suggests Australia is “withstanding the uncertainty offshore” and the recovery in the non-mining sectors of the economy has “stepped up a gear”.
According to the NAB survey, overall business conditions rose by three points to +12 index points in March, above the long-run average of +5 and its highest level since 2008.
“It is particularly encouraging to see the employment index point towards ongoing strength in the labour market, supported by signs the recovery is broadening into previous trouble spots such as manufacturing,” Mr Oster said.
“The lift in business confidence suggests a lower risks of contagion from global uncertainty, but also provides some assurance that gains in conditions will be sustainable,” he added.
In its Australian economic forecast NAB “modestly revised” its GDP forecasts to 2.7 per cent in 2016 and 3 per cent in 2017, followed by an “easing” to 2.5 per cent in 2018.
NAB also expects the Reserve Bank of Australia to maintain the official cash rate on hold at 2 per cent for a “considerable period”.
“That said, the outlook will depend on how the data fall, with the central bank seemingly allowing itself some room to move,” NAB said.
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