There was a sharp lift in business confidence in the second quarter of 2019, according to the quarterly NAB index, as investors adjusted to the victory of the business-friendly Coalition government.
The survey found overall business confidence rose from a 0 index point reading in Q1 to +6 index points in Q2.
NAB said the rise was driven by the results of the Federal election as many businesses had previously priced in the negative business impact of a potential Labor win. During the election, Labor had campaigned for the removal of franking credits and cracking down on underperforming industry super funds.
Confidence rose across all sectors except business services and financial firms with both sectors reporting no change in their confidence levels.
Alan Oster, NAB group chief economist, said: “The strong lift in confidence appears to be related to the outcome of the Federal election, with the bulk of the survey conducted post-election day and also around the time of the firming expectations of rate cuts.”
However, NAB said the earlier kick in business confidence had unfortunately already evaporated by the end of the quarter. Its monthly survey for June found business confidence unwound the May bounce and fell to +2, although finance remained one of the most optimistic sectors.
“Based on the June monthly business survey we already know this effect was shortlived with confidence pulling back.”