NAB says business confidence is “encouragingly resilient and positive” despite recent market volatility and weak economic data.

Although business confidence took a step back over December, the latest NAB Monthly Business Survey found the index remained largely positive, only falling from +5 to +3.

“While recent big declines in oil and equity markets highlight potential risks to the global outlook, relatively positive business conditions appear to have, so far, acted to reassure business sentiment,” NAB group chief economist Alan Oster said.

The survey found that business conditions decreased to +7 index points, down from +10. The drop was experienced across sales, profits and employment.

The services sector saw the biggest benefits of a depreciating Aussie dollar and lower interest rates, which, according to the survey, has encouraged tourism spending.

NAB noted that retail spending “continues to be relatively resilient” in light of improving trade conditions, with a 0.7 per cent month-on-month rise in online spending.

The survey found that business conditions contracted for the construction sector, which fell by 12 index points. Manufacturing also fell by 8 index points. The survey highlighted that confidence in the mining sector is lowest and is expected to remain weak.

Overall the survey continues to show business conditions at quite elevated levels, as the December index of +7 is still above the survey’s average of +5 points.

“This outcome suggests that there are no real signs (beyond normal monthly volatility) that there is a fundamental weakening in the non-mining recovery,” Mr Oster said.

He added that the resilience shown in both business confidence and conditions must be maintained over the coming months in order to ensure that the non-mining recovery continues.

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