The National Australia Bank (NAB) reported its business confidence index climbed 4 points m-o-m to +12 index points in July, well above the long-run average of +6. A reading above zero signals an improvement in business confidence, and a reading below zero indicates a deterioration.

At the same time, the NAB's business conditions index rose 1 point m-o-m to +15 last month, which was the highest level since early 2008 and well above the long-run average of +5.

By component, there was an increase in profitability (+18; +4 points m-o-m) in July, but employment conditions (+7) were unchanged, and trading (+20; -1 point m-o-m) was slightly lower, albeit still at very high levels.

Alan Oster, the NAB's Chief economist, noted, "The persistent strength in employment conditions has made us a little more optimistic about the near-term outlook for the labour market. That said, there are still longer-term challenges to domestic demand, which will have implications for the labour market, while the ABS underemployment rate is also suggesting that there is still a fair degree of slack in the labour market".

Other leading indicators in the NAB's report were also a little less upbeat, with forward orders (+3; -2 points m-o-m) softening slightly and capacity utilization rates (81.9 percent) unchanged.