Australian business confidence rose in December to the highest level in seven months after the central bank made the second of two consecutive rate cuts, a private survey showed.
The confidence index was 3 last month from 2 in November, said a National Australia Bank survey of about 400 companiesfrom January 9-13 that was released in Sydney yesterday. That was the highest since May. The business conditions gauge, a measure of hiring, sales and profits, was unchanged at 1.
The Reserve Bank of Australia reduced the benchmark rate by a quarter percentage point on November 1 and again on December 6 as inflation pressures eased and risks to global growth increased.
Australia recorded its worst annual job growth in 19 years in 2011 as consumers boosted savings amid concern about potential fallout from fiscal problems in the US and Europe.
"Business sentiment over recent months has been seemingly resilient to the weakness in Europe, which has contributed to a slowing in global activity, perhaps reflecting the effects of the RBA's recent interest rate cuts," NAB chief economist Alan Oster said in a statement.
RBA Governor Glenn Stevens lowered the overnight cash rate target to 4.25 per cent from 4.5 per cent in December, citing "considerable turbulence" in financial markets and an increased chance of a "further material slowing in global growth".
Traders are pricing in a 64 per cent chance Stevens will lower borrowing costs again at the central bank's next meeting in February, interbank cash-rate futures show.
