Business conditions skyrocket in October A RECORD-HIGH surge in business conditions in October has failed to light a fire under Australian companies, with confidence taking a fall. CONDITIONS rallied from one point in September to 13 in October, the largest monthly rise in the 16-year history of the National Australia Bank monthly business survey. The measure of business conditions looks at things like employment, trading performance and profitability. But despite the strong result, confidence dipped, falling one point to four - its lowest level since the pre-election jump last year. Confidence fell most in transport and utility companies followed by manufacturing and wholesale, suggesting manufacturers were yet enjoying any benefits from the lower Australian dollar. The mismatch between confidence and conditions suggests the strong surge in conditions may not last long, especially given consumers remain cautious and unemployment is still rising, NAB economists said. They said the jump in conditions suggested a strong start to the December quarter although growth would still be constrained by the soft labour market, weak terms of trade and signs of a downturn in construction. "While welcome we remain cautious regarding the sustainability of the improvement," NAB economists said. This is the first time since 2012 that confidence has dropped below conditions, suggesting firms remain uncertain over near-term demand in their industry. The step up is unlikely to be sustained unless accompanied by a further lift in trend conditions, and/or a similar jump in business confidence over coming months. Indeed, other timely economic indicators generally do not support such a strong recovery in conditions.