Australia business mood darkens as activity slows -survey
Reuters
Published Dec 11, 2023 07:39PM ET
SYDNEY (Reuters) - Australian business confidence fell to its lowest since the pandemic in November as sales and profits softened, a survey showed on Tuesday, while price pressures picked up amid a lack of spare capacity.
The survey from National Australia Bank (OTC:NABZY) (NAB) showed its index of business conditions fell 4 points to +9 in November, still above average but well off the highs seen earlier this year.
The confidence index slid 6 points to -9 which, barring the pandemic, was the worst reading since 2012.
"For the consumer exposed sectors, you really need to go back to the global financial crisis to see confidence this weak in retail and recreation & personal services," said NAB's chief economist Alan Oster.
Consumers have been much more downbeat than business this year, as high inflation and rising borrowing costs ate into spending power. Yet, strong population growth and government spending on infrastructure had helped insulate many firms.
The Reserve Bank of Australia (RBA) lifted rates to a 12-year high of 4.35% in November, but held steady this month.
"We will be closely watching to see if the weakness in confidence is sustained and whether a trend emerges in conditions, but for now it points to ongoing soft growth in Q4," Oster added.
The survey's measure of sales fell 6 points to a still healthy +13, while profitability dropped 5 points to +6. Employment remained firm at +8.
Capacity utilisation remained high at 83.9%, which saw labour costs accelerate to a 2.2% quarterly rate in November. Purchase costs, final output prices and retail inflation all picked up in the month.
"The hope is that with activity slowing the easing in price pressures becomes more evident in early 2024," Oster said.
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Written By: Reuters
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