Australian business activity rebounds in Feb: survey

[SYDNEY] A measure of Australian business conditions rebounded in February as a tapering off in Omicron cases saw customers return to shops and an easing of supply bottlenecks across industries.

Tuesday's survey from National Australia Bank (NAB) showed its index of business conditions rose 7 points to +9 in February, reversing all of January's drop. The index of confidence climbed 9 points to +13, well above December's low of -12.

The survey's measure of sales picked up two points to +10, while profitability rose to +5. There was also a welcome 9 point jump in employment to +8.

"The employment index has improved considerably as the labour market strengthens, after the virus caused many to be unable to work due to illness or isolation requirements at the peak of the recent wave," said NAB chief economist Alan Oster.

"That said, the survey for the month was largely completed before the invasion of Ukraine, so we will have to wait to see how big the impact of the conflict will be on confidence."

Measures of forward orders and business investment also picked up, suggesting the recovery would continue.

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Inflation remained a problem as purchase costs rose at a quarterly pace of 2.7 per cent amid high commodity prices. Labour costs held at a 1.7 per cent pace, while retail price growth jumped to 2.1 per cent to match the highs seen in late 2021.

"The results suggest another quarter of strong inflation is likely when March quarter CPI is released next month," said Oster.

Analysts have been warning the March quarter consumer price index could again surprise on the high side and put pressure on the Reserve Bank of Australia (RBA) to start raising interest rates sometime in the next few months. REUTERS