SYDNEY (Reuters) - A measure of Australian business conditions dipped slightly in April but confidence unexpectedly improved despite the prospect of big spending cuts and tax hikes in the federal government's May 13 budget.
National Australia Bank's survey of more than 400 firms showed business confidence rose two points to stand at +6, returning to long-run average levels after hitting a post-election low last month.
"The rise in confidence was a little surprising given negative rhetoric about a 'tough budget'," said NAB's chief economist, Alan Oster.
"Broader macro indicators are looking a little more positive - including the labour market - and may be helping confidence, which is highest in finance/ property/ business and retail."
The report's index of business conditions slipped 1 point to stand at 0 in April as the measure of forward orders dropped to -6 from +2.
The survey's index of employment, however, continued to improve, moving up to 0 from -1.
Inflation pressures remained relatively muted due to lower labour cost pressures.
NAB said it expects first quarter gross domestic product to be stronger than it previously expected and believes the unemployment rate will peak at lower level than earlier anticipated.
As a result, it has dropped its call for a rate cut in November although it does not see rates rising until late 2015.