Australia business conditions rise in September as price pressures ease
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AUSTRALIAN business conditions rose in September helped by a rebound in employment, a survey showed on Tuesday, suggesting levels of activity had remained resilient despite the economy tracking through a period of slow growth.
The survey from National Australia Bank (NAB) showed its index of business conditions rose 3 points to +7, while the more volatile business confidence index rose 3 points to -2, with improvements in retail, and recreation and personal services.
“Some of last month’s fall in confidence was reversed in September but confidence remains well below average,” said NAB Head of Australian Economics Gareth Spence.
“Interestingly, as we think we are passing through the weakest point in economic growth for this cycle, business conditions have broadly tracked around average through mid-2024.”
Within the conditions measure, the index of employment jumped to +5 after it plunged to +1 in August.
The Reserve Bank of Australia (RBA) has held interest rates steady at 4.35 per cent since November, judging the current rate restrictive enough to bring inflation back to its target band of 2-3 per cent while preserving the employment gains.
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Headline inflation slowed to 2.7 per cent in August, back in the target band, due to the government’s electricity rebates, but the RBA has warned the monthly measure is volatile and it would look through the temporary impact.
Swaps imply less than a 50 per cent probability that the RBA will cut in December.
The survey found price pressures continued to abate with both survey-wide and retail sector price growth continuing to trend lower in the month. However, input cost growth remained higher, suggesting that business margins were being pressured.
The growth in labour costs slightly eased to +1.7 from +1.8 in August, while purchase costs fell to +1.2 from +1.6. REUTERS
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