Business conditions have reached a more than two-and-a-half-year high, stoking hopes the Australian economy may be nearing a turning point.

Business conditions almost caught up with business confidence in December, up seven points to +4 points, according to the National Australia Bank monthly business survey.

Confidence was unchanged at six points.

“Business conditions recorded a surprising jump to a more than two-and-a-half-year high in December – cementing the upward trend seen over recent months – supported by the low interest rate environment, higher asset prices and less elevated Australian dollar,” NAB economists said.

“Confidence has remained surprisingly elevated following the post-election jump, and could potentially remain at these levels for longer than previously thought given that the conditions index has begun to respond.

“More positive economic indicators for Australia hold out hope that a turning point may be near.”

NAB economists said the global upturn was continuing and was mainly being driven by advanced economies.

Improving asset prices and a depreciating Australian dollar were expected to bolster consumer spending and exports while stronger housing approvals were also supportive in the near term, the economists said.

But the labour market remained weak because of the decline in labour-intensive mining investment, they said.

Better Australian economic conditions as well as surprisingly high December quarter inflation figures had seen NAB move its forecasts for another rate cut from May to November, with rate hikes not expected until late 2015, the economists said.