Treasurer Joe Hockey is confident about the outlook, even though the economic data is mixed.
Federal Treasurer Joe Hockey is confident about the medium-term outlook, even though there are conflicting economic gauges at the moment.
National Australia Bank’s monthly business survey released on Tuesday showed conditions dropping sharply in February, reversing half the gains posted since September’s federal election.
However, another survey showed small business is more confident about future revenues, albeit coming off a low base.
Mr Hockey also pointed to last week’s run of strong data that included “astoundingly good” retail sales numbers and dwelling approvals figures that indicate an enormous pipeline of construction is building.
“There are conflicting data sets out there at the moment,” Mr Hockey told Macquarie Radio, adding that people should not get distracted by one-off events either domestically or globally.
He said he was more positive about the global economy than three months ago.
“Over the medium term, things are going to get better and I think the economy will respond,” Mr Hockey said.
NAB’s business conditions index fell to zero in February from a three-year high of five points in the previous month, led by manufacturing unwinding January’s surprising improvement.
While slightly softer business confidence remain above trend, sales and employment indicators fell markedly in the month.
NAB chief economist Alan Oster is sticking with his forecast for a jobless rate of 6.5 per cent in late 2014, but now expects it will stay “higher for longer”.
He also expects the Reserve Bank will need to cut the cash rate again in November.
The latest labour force data for February is released on Thursday. In January, the jobless rate struck a 10-year high of six per cent.
Mr Hockey dismissed the opposition’s continued gripes about rising unemployment, saying there shouldn’t be any “shock value” because that’s the economy Labor left behind and having predicted a jobless rate of 6.25 per cent by June.
Separate research by business software provider MYOB was slightly more positive, finding the number of firms enjoying rising revenues was the highest since March 2011.
The March 2014 MYOB Business Monitor also saw a significant increase in small- and medium-size enterprises anticipating a revenue rise in the next 12 months – 34 per cent compared with 25 per cent previously.
MYOB chief executive Tim Reed said the findings clearly told a positive story.
“Buoyed by record-low interest rates and a lower Australian dollar, local SMEs’ hard work and resilience is now bearing fruit,” he said.