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Australian business conditions ease again in November

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An index of Australian business conditions eased in November, and while the survey still signalled solid employment growth inflationary and wage pressures remained subdued.

[SYDNEY] An index of Australian business conditions eased in November, and while the survey still signalled solid employment growth inflationary and wage pressures remained subdued.

The National Australia Bank's index of business conditions, released on Tuesday, slipped 2 points to +11 in November, but remained well above the long-run average of +6.

The survey's volatile measure of business confidence also eased two points to a below average +3 in November. Forward orders, its most reliable indicator of domestic demand, fell sharply to 0.

Its employment index climbed to +9 in November after falling sharply the previous month.

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The official jobless rate has been declining gradually to hold at a 6-1/2-year trough of 5 percent in October. Data for November is due out next week and another solid report is expected.

The strength of employment contrasted with a surprisingly soft reading on economic growth for the third quarter released last week, which led investors to wipe out any chance of a rise in interest rates next year.

Policy makers from the Reserve Bank of Australia (RBA) have since reiterated the next move in rates will likely be up, while acknowledging that the process will be gradual.

"Overall surveyed price and cost measures suggest that inflationary pressure in the economy remains weak," said NAB economist Alan Oster.

"Labour costs, a wage bill measure, rose slightly but most likely reflects ongoing employment growth, with wage price measures generally remaining weak."

Sluggish wage growth is one of the main reasons the central bank has kept its cash rate at record low 1.5 per cent for over two years.

REUTERS