Australian business conditions, sentiment rise in January

Businesses in Australia have reported that conditions were very buoyant in January. Business conditions in January rose sharply, reaching the second highest level since the GFC. Business sentiment also increased further, and is beginning to show some trend improvement after the blip in the middle of 2017.

Delving into details, the report seems extremely encouraging. Companies report that capacity utilization is now sitting at the highest pace since 2008, while profitability continues to build on its very robust 2017, noted ANZ in a research report. Both the indicators augur well for the labor market, implying that further solid employment outcomes are likely and make further inroads into the jobless rate, through at least the first half of 2018, stated ANZ.

Even the struggling retail industry recorded the most solid conditions in seven months, although it continues to be by far the most subdued sector. Part of this monthly rebound is because of a reported recovery in retail prices; although a lot more would be required before a material rise in inflation is seen.

“We noted a month ago that the mining sector had improved dramatically over the past year, and this has continued into January. Most other industries remain around elevated levels, consistent with the broadening of economic growth”, said ANZ.

At 13:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was neutral at 47.5772, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -82.2747. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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