Business conditions and confidence slips

However, NAB chief economist Alan Oster said while there was an evident drop in both categories over the month, the result was still positive overall.

“Even though business conditions eased this month, they have remained well above average levels for the past year,” Mr Oster said.

In terms of business conditions, the services industry remained the top performer, while other sectors including – manufacturing and transport – were relatively upbeat.

The survey found the retail industry saw a bounce back in business conditions, having disappointed in recent months.

Changes in business confidence varied across industries, with mining and wholesale the only sectors to show negative confidence levels. The largest gains in confidence occurred in the construction and retail industries.

Mr Oster said he was maintaining an upbeat near-term outlook for the Australian economy.

“Looking through the month-to-month volatility in the survey, these results confirm a continuation of the favourable business environment that has helped to underpin the non-mining recovery,” he said.

“We continue to look for signs that the recovery is broadening, and while evidence of that was a little less compelling this month, solid results for manufacturing and transport – as well as a bounce back in retail – are encouraging.

“Low interest rates and a more competitive currency (even given its recent strength) remain key to ongoing improvement, especially in the context of global economic uncertainty.”

[Related: Tighter credit has cooled broker loan growth, says NAB chief]