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Australia NAB Business Conditions Improve; Confidence Weakens

Australia's business conditions improved further in July ahead of the escalation of stage 4 restrictions in Victoria, while business confidence weakened from June, survey results from the National Australia Bank revealed Tuesday.

With the improvement in three sub-components, the business conditions index advanced to zero in July from -8 in June.

Trading and profitability returned to positive territory and the employment index continued to improve. The improvement in conditions was broad-based across states but the monthly outcome was mixed across industries.

Although conditions made a notable improvement, it may reflect activity coming off a low base, NAB said.

The survey showed that the business sentiment index declined to -14 from zero a month ago as confidence logged significant deterioration across all industries.

While the improvement in conditions is very welcome, capacity utilization and forward orders point to ongoing weakness overall, Alan Oster, NAB group chief economist said.

Therefore, with confidence still fragile there is some risk that conditions lose some of their recent gains in coming months, Oster added.

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