[SYDNEY] A measure of Australian business conditions picked up in August as firms reported better profits and employment, while input costs grew at the slowest pace since 2021 in a promising sign for inflation and margins.
The survey from National Australia Bank showed its index of business conditions rose two points to +7 in August, taking it back to the long run average. A more volatile index of business confidence eased 4 points to +4, but again was around the long run trend.
“Regions and industries in the economy which have faced headwinds in recent years have showed positive signs in recent months, adding to our confidence that the broader economy is on a better trajectory in the second half of the year,” said NAB chief economist Sally Auld.
Official data released last week showed the economy grew at its fastest pace in two years in the June quarter as consumer spending finally responded to lower borrowing costs and cooling inflation.
The improvement in consumption looks to be lasting with the survey’s measure of business sales holding firm at +12 in August, while profitability bounced 2 points to +4.
Cyclically sensitive sectors including manufacturing and retail both saw gains in confidence and conditions.
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In a welcome sign for the labour market, its measure of employment rebounded 3 points to +6, recouping all the drop seen in July. Forward orders also ticked up a point to +1, the first move into positive territory in two years.
Price indicators in the survey all eased back in the month with purchase costs running at a quarterly rate of just 1.1 per cent, the smallest increase since 2021.
Quarterly growth in retail prices halved to 0.5 per cent, while labour costs slowed to 1.5 per cent, from 1.9 per cent. REUTERS
