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May 14th, 2014

Business confidence is on the rise

The nation's small businesses are under all sorts of pressure at the moment, but even in light of this, it seems that confidence levels are starting to rise.

There was a slight lift in optimism in April, National Australia Bank's Monthly Business Survey showed, as it returned to normal levels after hitting a post-election low in March.

Such positive results may have come as a surprise to many, especially with the prospect of a federal budget just around the corner and other parts of the survey proving soft.

The confidence index improved by two points to reach +6 on the index, down from the highs seen back in 2013.

NAB believes this might continue, as soft forward orders and difficulties arising from business investment start to take their toll on companies throughout the country.

Services, construction and retail are forecast to weather the storm well and confidence remains high across the majority of industries, with the main exception being mining.

Although confidence may have proved especially high, this wasn't necessarily the case for business conditions.

There was variation across a number of industries, with wholesale and mining apparently up against the biggest challenges. Recreation and personal services, on the other hand, remain the strongest.

In fact, business conditions registered a reading of zero on the index, which is well below the long-term average of +5 seen since the survey first began back in 1997.

However, it's not all bad news, as trend business conditions have improved since the middle of last year, helped out by a low interest rate environment and declines in the value of the Australian dollar.

On a state-by-state basis, New South Wales and Victoria were the only two mainland regions to record declines in business conditions, while other areas posted strong gains.

Meanwhile, confidence remained positive in all mainland states, despite a marked four-point fall for New South Wales during the month.

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