/www.bloomberg.com/ By Victoria Batchelor
Sydney, Oct. 8 (Bloomberg) -- An index of profit, sales and employment at Australian businesses rose to its highest in more than 2 1/2 years in September as builders and retailers benefited from rising demand.
National Australia Bank Ltd.'s business conditions index, which also measures inventories and orders at 400 non-farm companies, rose 1 point to a reading of 15, the highest since December 1999. Thirty- one percent of companies said sales, profit and employment improved in September, and 15 percent said business was poor or very poor.
The report signals consumer spending and construction will continue to drive an economy that expanded 3.8 percent in the second quarter from a year earlier.
``The survey depicts an Australian economy with still considerable domestic momentum,'' Alan Oster, chief economist at National Australia Bank, said in a statement.
``Low interest rates, increased government spending and rising house prices continue to drive household spending and business investment.''
The Australian dollar and bonds were little changed after the report. The dollar rose to 54.96 U.S. cents at 11:36 a.m. in Sydney from 54.94 cents. The yield on the bond maturing May 2013 was unchanged at 5.43 percent.
It follows reports last week showing building approvals in August rose 23 percent to the highest in eight years. Retail sales rose 0.2 percent in August from the previous month.
A slump in global stock prices has had little impact on Australian companies, today's survey showed, with business confidence also rising in September.
Business Confidence
Business confidence rose 2 points to an index reading of 5 points, reversing more than half the decline since April.
The measure of export sales rose in September, the first increase since April.
There are ``few signs yet of any impact on current conditions from recent falls in global share markets and heightened geopolitical tensions,'' Oster said.
``Still, the softening in activity across major overseas economies during recent months leaves the Reserve Bank of Australia with more time'' to gauge the impact on Australia's economic growth, he said.
The central bank left its benchmark interest rate unchanged at 4.75 percent last week for a fourth straight month. Eleven of 22 economists surveyed by Bloomberg News expect a quarter percentage point increase before the end of the year.