While the Australian economy continues to report sub-trend growth, the December results reinforce the point that it is still performing reasonably well. Conditions improved in December, driven by stronger-than-expected trading and profitability.
Confidence has been getting weaker for some months and trading conditions have weakened a bit in the latest survey. They could weaken more in the short term, but when you look at the medium term, companies are still quite optimistic.
On the other hand, export volumes benefit from increased capacity and a lower Australian dollar partly offset by some moderation, but sustained trading partner growth during 2006-2007.