It appears that business conditions are showing signs of recovery, following the slowdown caused by the Queensland floods, according to the National Australia Bank national business survey for March.

The survey reported that business conditions lifted 11 points from February to March.

NAB said the growth was driven by sharp rises in trading conditions and profitability.

“The overall business conditions index is now at its highest level since March 2010. Conditions in Queensland improved significantly in the month but are still very poor,” it said in the survey.

“Business confidence declined in March, though remains positive and above trend. More broadly, confidence is now more in line with business conditions or outcomes.”

Retail prices remained unchanged at a 0.1 per cent quarterly rate but it is predicted that while price remained relatively low this month, purchase costs are expected to rise.

NAB also said it expects the Australian economy to have stalled in March quarter because of floods and cyclone, as well as weak coal exports in February.

“NAB survey conditions improved sharply quarter-end and may signal expected recovery from mining investment, flood reconstruction and income effects of commodity prices,” the report said.

The bank predicts that the next rate rise is still expected in August to 5 per cent and another 0.25 per cent increase in November.