Australia Business Conditions Edges Down, Confidence Rises - NAB
April 08 2024 - 11:01PM
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Australia's business conditions edged down one point in March,
while confidence gained a point and cost pressures softened
further, survey results from NAB showed on Tuesday.
The business conditions index fell to 9 in March from 10 in the
previous month. Meanwhile, the business confidence indicator rose
to 1 from zero in February.
Conditions remained a little above average and confidence a
little below average for the better part of a year.
NAB Chief Economist Alan Oster said this fundamentally indicates
that firms have continued to be a bit concerned about the outlook
even as the economy has remained resilient.
"At some point, we have to expect these two headline measures to
come back into better balance, either because firms' concerns are
allayed and the outlook improves, or because the economy slows
further - and of course we hope it will be the former rather than
the latter," said Oster.
Within business conditions, trading conditions and employment
remained broadly unchanged, while profitability dropped four
points. The survey showed that forward orders gained three points
to -1 largely due to some improvement in retail. Capex was steady
at +7, while the capacity utilization rate eased to 83.2 percent
from 83.4 percent.
The ongoing gradual easing in capacity utilization indicates
that supply and demand are coming into better balance as we move
further from the pandemic period and border closures and monetary
policy works to slow the economy, noted Oster.
Further, labor cost growth slowed to 1.6 percent and purchase
cost growth weakened to 1.4 percent. Likewise, product prices
climbed at a slower pace of 0.7 percent and retail price growth
edged down to 1.3 percent. Recreation and personal services prices
also rose at a weaker pace of 0.9 percent.
"…progress on bringing inflation back to target will be gradual
from here, and we expect that to be further reinforced by the Q1
CPI result later in April," Oster said.
By industry, there were positive signs for retail and
construction as both reported improvement in confidence and
conditions in March.
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