/www.bloomberg.com/ By Victoria Batchelor
Sydney, Oct. 15 (Bloomberg) -- Australia's main index of business profit, sales and employment is at its highest in almost three years, signalling consumer spending and a building boom are helping the nation weather a global economic slowdown.
National Australia Bank Ltd.'s business conditions index, which surveys 900 non-farm companies, rose 6 points to a reading of 14 in the third quarter, the highest since the fourth quarter of 1999. Thirty-three percent of businesses said sales, profit and employment improved and 19 percent said business was poor or very poor.
The survey suggests business investment is likely to strengthen, helping the economy expand about 3.5 percent in the year ending June 30, 2003, the bank said. The economy grew 3.8 percent in the year ended June 2002.
``The Australian economy continues to record robust levels of growth in the third quarter,'' Alan Oster, chief economist at National Australia Bank, said in a statement. ``The underlying strength in business confidence gives some comfort to expectations of a continuing pick-up in business investment.''
Non-residential construction companies, utilities and wholesalers reported they hired workers in the third quarter, the report showed. National Australia Bank is forecasting the unemployment rate will decline below 6 percent by the middle of next year from 6.2 percent in September.
Export sales were little changed in the quarter as companies experienced weaker demand because of the global economic slowdown.
The National Australia Bank expects the central bank to keep its benchmark interest rate unchanged at 4.75 percent until next year because of the slump in stock prices globally and a world economic slowdown.
Currency Outlook
``The Reserve Bank, despite the strength of the domestic economy, is likely to be on hold for a number of months,'' Oster said. Previously, National Australia Bank had forecast a quarter point rate increase in December.
``The Australian economy is not bulletproof in the face of a major slowing in global growth in 2003,'' Oster said. Australia sells one-fifth of its economic production overseas.
National Australia Bank lowered its growth forecast for developed countries to 2.5 percent for the calendar year ending Dec. 31, 2003, from 3.25 percent in the second-quarter survey.
Meantime, respondents lowered their forecasts for the Australian dollar, which traded at 54.54 U.S. cents at 11:00 a.m., Sydney time.
The currency is expected to rise to 55.9 U.S. cents in the next six months, according to the average of the 900 companies' surveyed. That's down from the 57.7 U.S. cents forecast in the second quarter survey.