Australian business sentiment returned to levels last seen in April as profits increased although sales and employment conditions weakened, data released in Sydney today show.

The confidence index rose to 11 points from 2 points in July, according to a National Australia Bank Ltd survey of more than 530 companies from Aug. 24 to Aug. 31.

"Business confidence rebounded 9 points in August, following three months during which overseas financial turbulence and policy uncertainty contributed to more subdued readings," NAB said.

"However, confidence has not returned to the euphoric levels recorded late last year and early this year."

The first gain in business confidence in six months adds to proof including elevated hiring and exports that back Reserve Bank of Australia Governor Glenn Stevens' view of an economy expected to expand after growing the most in three years last quarter. NAB lifted its economic growth forecast for 2010 from of 3 to 3.25 percent.

The data also revealed business conditions were unmoved at an index reading of 5 points in August.

"The...index at 5 points remains just below the long-term average reading of 6 points."

Employment conditions index fell to 3 from 7 the month before but still shows optimists outweigh pessimists.

"As the economy gathers speed in 2011, the case for rate rises will become more compelling," said Alan Oster, chief economist at National Australia in Melbourne.

He expects the RBA to lift the benchmark lending rate by a quarter percentage point each quarter in 2011, increasing the rate to 5.5 percent by the end of the year.

There is also a risk the central bank could resume rate increases as early as November, Mr Oster said.