Last week it was consumer confidence hitting a 19 month high, today its business confidence up sharply for a second month in a row, but with business conditions now up as well for the first time since before the crunch exploded with the Lehman Brothers collapse last September.

Today’s National Australia Bank’s June survey of business conditions and confidence had a very different message to that from the gloomy ANZ ads jobs survey and the labour force figures last week.

In fact business confidence is now positive for the first time since December 2007, when the collapse of the Centro Property and Retail Trusts sparked a selling wave on the market and confirmed the impact of the credit crunch on highly indebted companies here.

But a major caveat for this renewed and continuing burst of optimism: it’s temporary in the opinion of the NAB and won’t last, so enjoy the return to the good times, because conditions could very well turn down again later this year and into 2010.

But with the Chinese economy continuing to grow, now South Korea and Singapore have both sent signals their economies are recovering. In fact Singapore said today that its economy grew at an incredible 20% annual rate in the second quarter after it bounced back strongly from the sharp first quarter slump. Both countries have boosted their estimates for 2009 growth and are confident about 2009.

But the NAB said “trading and profitability back to levels not seen since the collapse in global activity in late 2008 while labour shedding significantly slower.

“Key drivers of the jump in activity include better performances in manufacturing, construction, wholesaling and finance, suggesting government stimulus continues to temporarily boost growth.”

The NAB said that forward orders jumped very sharply (especially in retail and cars). But capacity utilisation unchanged as stocks fall. That’s a sign of the impermanence of the improvement. Companies are running down stocks to satisfy the improvement in demand. But if demand manages to be extended, that will stimulate companies to rebuild stocks, which will in turn have a longer positive impact.

The NAB said the results of its June survey “suggests domestic demand returned to growth in mid-2009.”

Despite this upturn, the NAB is playing it cautious, maintaining its domestic growth forecasts for this year at a 0.50% contraction and 1% growth in 2010.

The bank explained this stance and warned:

We see some of the current strength as temporary with activity to continue to decline in H2 and unemployment to rise significantly (to around 8% next year).

The RBA now on hold — less inclined to cut rates further, but we would not rule out late cycle cuts as unemployment rises (albeit this is no longer our base case). Rate rises not likely till H2 2010.

“We see elements of pull forward in the recent data — e.g. via the investment allowance and first home buyers scheme — or stimuli that will not be there in the second half of 2009 — e.g. cash hand outs to consumers and continuing strength in net exports.

That suggests that the second half of 2009 will see negative growth with the turning point either in late 2009 or early 2010.