A National Bank of Australia (NAB) business survey has showed Tuesday that business conditions and confidence dipped a bit but stayed in a generally positive realm in the first quarter of 2010, as an upbeat mood towards Australia's promising economic outlook eclipsed the sharp decline seen in trading conditions.

According to the Australian Associated Press (AAP), NAB said that the wide-ranging indicators could encourage the Reserve Bank of Australia (RBA) to raise one percent in its interest rates by the end of calendar 2010, as its chief economist Alan Oster stressed that business confidence is solid and lost a point in the March quarter but stayed above the zero level that separates optimism from pessimism.

Mr Oster said that the decline in business conditions represented a steep fall in trading conditions, which have been cut by half since December 2009 and slid to nine from 18 points in the months leading to March quarter.

He said though that business investments maybe flowing in further over the next 12 months from the March quarter, as trading conditions went up to 23 points from the 19 posted in December last year.

Mr Oster said that Australia's GDP is projected to increase by three percent in 2010 and four percent in 2011, as he cited that the growths are brought about by the country's major business partners and stronger income effects from strong commodity prices.

He cautioned though that such positive development could push the RBA to raise its rates to 5.25 percent by the end of the year, from its current standing of 4.25 percent, as he projected that the promising economic conditions will get the central bank to normalise monetary policy at the soonest possible time and maybe getting even rigid by 2011.

AAP has also reported that the survey pointed to improving conditions in the mining sector but cited, too, the deteriorating state of the retailing, wholesaling and construction sectors.

The study has also revealed that business conditions improved in all states but Queensland, as it listed Victoria and South Australia as the best performing states, and followed by Western Australia, New South Wales, Queensland and Tasmania, which specifically reported poor conditions in March.