National Australia Bank’s widely watched monthly business survey shows conditions have improved by the most on record in October.

The survey found a massive jump in conditions from just +1 to +13 last month – the largest monthly rise since the survey started in 1998.

Conditions have now jumped well above the long term average level of +5, and are at their highest level since early 2008, before the global financial crisis rocked international markets.

Retail conditions rose very strongly, up by 15 points, although they remained fairly low in spite of the improvement.

At the same time as conditions surged, business confidence actually edged down from +5 to +4, which NAB believes casts great doubt on the durability of the apparent improvement in conditions.

The bank’s economists point out that the more stable trend figure had business conditions up 2 points to +6, with services sectors the strongest and mining, wholesale and retail the weakest.

On the confidence front, mining had the biggest improvement, but remains the weakest in trend terms at -15, while construction was the most confident sector at +11.

Forward orders would be a big factor boosting construction sector confidence, with a huge jump in October leading that sub-index higher.

Businesses also appear to have started restocking on the improved outlook, and hiring intentions also rose from a negative -5 to a mild positive +2.

The better-than-expected result has triggered a small rise in NAB’s GDP forecast for this year from 2.8 to 2.9 per cent, but has not prompted it to change its unemployment (peak at 6.5 per cent) or interest rate (on hold until late 2015) forecasts.