Australian business conditions, confidence rise in December

Business conditions in Australia finished 2017 on a strong note. Even if conditions are below the record peak seen in October, overall 2017 was the most solid year in a decade. Business conditions rose in December to remain around elevated levels at 13. Business sentiment surged and has caught up to the level of current conditions. Possibly businesses are becoming more confident that the current strength in the economy is expected to continue.

The details of the report were widely positive. The stand-out detail was the increase in capacity utilization. In terms of trend, the ongoing absorption of spare capacity augurs well for the labor market and implies that there will be further rebounds in jobless rate, and over time, wage growth, noted ANZ in a research report. Moreover, companies’ reported profitability increased slightly in December to finish 2017 with the strongest annual average since 2007.

The mining sector saw the strongest rise in conditions in December, Even looking through the monthly volatility, conditions in the mining industry rebounded significantly though 2017, as the fall in mining investment nears an end. In the meantime, the construction sector remains the strongest in trend terms, underpinned by a large backlog of work throughout housing, commercial property and infrastructure.

At 13:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was neutral 43.6668, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 6.00081. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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