Businesses assessments of their confidence based on their own trade, sales and conditions are increasingly positive, ANZ's chief economist says. Photo: Unsplash/ The Nix Company
Business confidence has fallen slightly but improving activity shows things are looking brighter.
ANZ's survey for November showed general sentiment down 1 point to net 65 percent optimism, off the back of a ten year high the month before.
But the more closely followed "own activity" measure was up 2 points to 48 percent optimism.
ANZ chief economist Sharon Zollner said it was positive news.
"As long as we don't get any more negative surprises from offshore, or that sort of thing, then things are looking up.
"We're seeing a pretty broad-based improvement in both sentiment and activity, but it is off fairly low levels, and so it's going to feel like hard yards."
Zollner said unemployment and business failures are likely to continue, given the economy is still very weak - but the tide is turning.
She said confirmation of continued interest rate cuts was helping to cure business sentiment.
"I think that is a positive for not just investment, but also employment. If firms are confident better times lie ahead, then they are more likely to take risk - whether that's making an investment or perhaps even just holding on to a staff member. That in itself could be a risky thing to do when your cash flow isn't where you need it to be.
"We're seeing a lift, not just in the expectations of how the economy is going to go, but firms' own activity, investment, employment, profitability. Across the board things are improving, so that is a pretty clear signal that better things lie ahead."
Zollner said businesses are also feeling better about getting credit during the next 12 months.
She said although times were not easy, both firms and household balance sheets were in a better position than during the global financial crisis.
"The price of credit is one thing, but the availability of it is also absolutely crucial, so this does suggest that the availability of credit is not expected to be a constraint.
"I'm not suggesting at all there isn't a lot of stress out there, but it doesn't look like the economy as a whole needs a lot of balance sheet repair before we can get back into action again, so I think that is also a pretty positive sign."