Pssst, don’t tell Kevvie Rudd or Wayne Swan yet, but there’s a growing chance they can take their foot off the stimulus pedal a bit more and relax; the economy seems to be gathering pace.

On Monday there was some angst about a dip in newspaper and online job ads last month, today there’s no sign of any concern as the latest National Australia Bank survey of business reveals what it calls as the “remarkable ongoing strength” in business confidence, and a surprise surge in business conditions.

So rapid has been the rise in conditions that they are now back to levels early last year and well before the Lehman Brothers collapse in September, 2008.

“Business confidence edges higher — a remarkable result given the recent surge to very high levels,” the NAB said in its statement on the survey this morning.

“Business confidence increased by two to +16 points in October. In October the strength was mainly in construction, transport and personal and recreational services. Mining was lower.

“Business conditions jumped sharply in October — up nine to +12 index points — above long run averages and back to results reported in early 2008, the NAB reported.

Instead of lagging well behind confidence levels as in previous months, business conditions have jumped, possibly meaning that the falls in the job ads last month were a one-off and that fears for a small rise in unemployment in Thursday’s labour force figures might not be realised.

Given that the first rate rise and continued talk of another for November (which happened), didn’t impact business confidence or conditions, you’d have to wonder whether the Reserve Bank might look at this survey result and then turn the rate setting knob up a notch or three.

This is a very strong result from the NAB’s survey and indicates that those fears of a slowdown in demand and activity in the economy after the cash stimulus impact dissipated, might not happen. Another couple of months of survey results such as this and the federal government won’t have any justification for avoiding making bigger cuts to the remaining stimulus programs.

“That strength was broad based — with strong gains in trading, profits and employment. Across sectors the main gains in activity were in transport, manufacturing and personal and recreational services,” the NAB said.

In fact, the way conditions have jumped seems to indicate a bit of a catch-up with the earlier improvement in confidence, as businesses saw conditions starting to improve, then  that being reflected in the actual results.

More importantly, the improvement in conditions was broad-based, much more so than in previous surveys.

“Improved business confidence appears to have been justified by stronger business outcomes.

“All parts of the index improved strongly. Profits were up nine to +13 points, trading up seven to +15 points, and employment up eight to +7 points. For trading and profits those are the best reading since February 2008 and for employment the best since April 2008,” the bank said in its survey summary.

“Strength in activity is also apparent in improving capacity utilisation while business has also restarted inventory accumulation.

“The only softness in the survey is new orders, but the level of orders would still be consistent with strong domestic demand (4% annualised).

“Wage pressures are still low, as are economy-wide price pressures. Purchase costs continue to track down (high AUD) and, importantly, retail prices continue to slow sharply.