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Businesses back on track after Omicron hit | Port Macquarie News

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Business conditions and confidence strengthened in February as the impact from the COVID-19 Omicron variant eased. However, the latest National Australia Bank monthly business survey was largely completed before Russia’s invasion of Ukraine. “We will have to wait to see how big the impact of the conflict will be on confidence,” NAB chief economist Alan Oster said. Business confidence rose eight index points in February to 13 points, building on a strong rise in January after a sharp fall in December when Omicron first hit. Business conditions also rose seven points to nine index points to be back above their long-run average. The result was driven by a nine point rise in the employment index, while trading conditions were up two points and profitability gained three points. “Overall, the February survey shows that the economy is quickly getting back on track as the Omicron wave recedes,” Mr Oster said. “The outlook is fairly strong with supply disruptions and cost pressures now the major challenge facing businesses.” Still, consumer confidence remains uneasy, rising slightly in the past week against the backdrop of mixed moods among the states. The ANZ-Roy Morgan consumer confidence index – a pointer to future household spending – rose 0.9 per cent to 101.1, a partial recovery from the 2.6 per cent drop in the previous week. “Nationally, confidence has been hovering around the neutral level of 100 during the past seven weeks, not heading in the same direction for more than two weeks,” ANZ head of Australian economics David Plank said. Local factors appeared to steer confidence among the states, for example, rising sharply in Queensland as the floods there receded, while in Western Australia confidence fell due to the surge in the Omicron variant cases. Consumer inflation expectations also fell by 0.1 percentage point from a seven-year high the previous week, but remained elevated at 5.2 per cent as petroleum prices reached a new peak. The Australian Institute of Petroleum said on Monday the national average price for unleaded petroleum struck another record in the past week, rising 3.3 cents to 183.9 cents per litre. Global oil prices have risen sharply as a result of Russia’s invasion of Ukraine. Still, Australians are back on the move and buying homes again following the end of COVID-19 restrictions. The CommBank household spending intentions index rose 1.8 per cent in February led by an 11 per cent increase in spending on transport and a 29.6 per cent rise in post-summer home buying. The index – which combines an analysis of CBA payments data, loan applications and publicly available search activity on Google Trends – also saw a 4.1 per cent pick-up in household services spending in the month. “Increased spending intentions in home buying, transport and household services supports our view that, as Australians get back out-and-about, the economic outlook for 2022 is for a year of solid growth,” CBA chief economist Stephen Halmarick said. Australia’s small and medium sized businesses also appear to be gearing up for such growth with demand for equipment and machinery financing up smartly in the first half of this financial year. CBA says asset finance soared 87 per cent in the first six months of the 2021/22 financial year compared to the same period in 2020/21. CBA’s executive general manager business lending Grant Cairns said the demand for asset financing has been largely driven by government incentives and businesses trying to manage supply chain disruptions. Australian Associated Press