SYDNEY, April 20 (Reuters) - Australian businesses have become more confident about the outlook for the next twelve months with investment plans at their highest since 2011 and a welcome pick up in hiring intentions, a survey showed on Thursday.
National Australia Bank's NAB.AX quarterly survey of more than 900 firms showed its measure of business conditions rose two points to +8 in the first quarter, well above the long run average of +1.
Firms expectations for the next three and 12 months also improved markedly, and across all industries apart from retail.
"The survey generally paints an encouraging picture of both current business activity and the outlook," said NAB's chief economist, Alan Oster.
"Leading indicators mostly improved in Q1 2017, which has been reflected in better outcomes in terms of investment and hiring intentions going forward."
An improvement in employment is much needed given the jobless rate hit a 13-month high in February and most of the new positions created last year were part-time.
"Employment expectations in both the near and medium-term have hit multi-year highs and firms are also indicating that it has become harder to find suitable labour," said Oster.
Importantly, firms were upgrading their investment plans after a long run of sub par growth. The survey's measure of capital expenditure for the next 12 months climbed 6 points to 28, the best reading since mid-2011.
Yet there were still few signs of inflationary pressure in the report, with labour costs very restrained. Retail prices rose just 0.2 percent in the quarter, possibly pointing to a muted outcome for consumer price inflation as well.
The lack of inflation is a major reason the Reserve Bank of Australia (RBA) has shown scant appetite for raising interest rates even as it fights to cool hot housing markets in Sydney and Melbourne.