SYDNEY, Feb 14 Reuters Australian business conditions rebounded sharply in January after three months of slowdown while cost pressures picked up again, a surprising sign of strength that could add to the case for yet more rises in interest rates.

Tuesday39;s survey from National Australia Bank Ltd NAB showed its index of business conditions had risen 5 points to 18 in January, well above its longrun average.

The measure of confidence climbed 6 points to 6, led by gains in the wholesale and the transport and utilities industries.

The improvement in confidence suggest firms have a more optimistic outlook as concerns about global growth prospects ease, while strong conditions are also providing evidence that the economy is more resilient than previously expected, said Alan Oster, NAB39;s chief economist.

The survey showed a notable 8point pickup in its sales index to a very high 28 in January, supported by historically low unemployment and rapid population growth.

Measures of employment edged up 2 points to 10, while profitability rose 4 points to 17.

The resilience of demand was one reason the Reserve Bank of Australia RBA lifted interest rates to a decade high of 3.35 last week and warned further increases would be necessary to contain inflationary pressures.

The NAB survey showed labour costs in November to January had been 2.7 higher than in AugustOctober, when they were up 2.1 from the previous three months. The latest rise is well down from the 4.6 peak rate…