(RTTNews) - Business confidence in Australia was on the rise again after declining in the previous month, while the index measuring business conditions also improved sharply, a report released by the National Australia Bank revealed on Tuesday.

The index measuring business confidence stood at 16 in October, up 2 points from September's reading of 14. This marks the highest reading recorded in the index in nearly six years. A figure above zero means optimists outnumber pessimists.

In October, the index measuring business conditions surged ahead by 9 points to 12, the highest reading in the index since early 2008. All three measures of business conditions improved in October. The profits index climbed 9 points to 13, and the sales index increased 7 points to 15. The employment index rose 8 points to 7 in October, marking the first move of the employment component into positive territory since August 2008.

The stock index moved into positive territory for the first time since mid-2008, climbing 9 points to 4 in October. On the other hand, forward orders index fell 4 points to 3, although the index remained a touch above the long-term average. At the same time, labor costs were up 0.8% on a quarterly basis, but plunged to record low reading of 0.3% in the year to October period.

The National Australia Bank revised up its growth forecast for the economy on the back of the strong showing of the business confidence and conditions index. The bank is now expecting 0.75% GDP growth in the second half of 2009, and 2.5% growth in 2010.
Solid returns on the business confidence front should offer encouragement to the central bank to step up its tightening cycle. The NAB expects the Reserve Bank of Australia to raise interest rates by a further 25 basis points in each of the next two meetings to bring up the overall cash rate to 4.00% by March.

Meanwhile, the Australian Bureau of Statistics announced yesterday that the number of loans for owner occupied housing in Australia jumped a seasonally adjusted 5.1% in September compared to the previous month, coming in at 65,505. This was higher than analyst expectations for a 3% increase following the revised 1.9% monthly decline in August.

The value of owner-occupied home loans was up a seasonally adjusted 6.7% to A$17.59 billion after the revised 2.7% fall in the previous month. The total value of dwelling finance commitments excluding alterations and additions increased 4.8%.

Also on Monday, the Australia New Zealand Banking Group reported that total job advertisements in Australia were down a seasonally adjusted 1.7% on month in October, coming in at 133,709 ads. On an annual basis, ads were down 42.3%.

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