Business conditions improved in September after two months of declines, but a full recovery may be gradual, according to NAB (ASX:NAB) research.
The bank's Monthly Business Survey also shows that business confidence rebounded sharply - due in part to the rapid depreciation of the Australian dollar - but remained negative on balance.
The Survey's index score for business confidence improved from -9 points to -2 points during the month.
Business conditions swung back into positive territory, to a +2 index score from -3 in August. Improvement in trading conditions, profitability and improvement all contributed to the gain.
But with forward orders remaining weak and stocks contracting slightly during the month, a swift recovery may not be on the cards, NAB said.
Conditions improved across nearly every industry, with manufacturing and mining getting the biggest bump. But while the mining, transport and utilities sectors are relatively strong, conditions remain weak in manufacturing, construction, wholesale and retail.
The turnaround spread across all states, but was particularly strong in Tasmania and New South Wales. Confidence improved everywhere except WA, where it was only marginally lower.
According to the report, if growth is maintained at current levels, it would be consistent with GDP growth excluding coal of 3.5%.