Australia business conditions steady in February, sentiment slips

[SYDNEY] A measure of Australian business conditions held steady in February with sales improving a little, a survey showed on Tuesday, though sentiment turned negative for the first time in 11 months as borrowing costs rose.

The survey from National Australia Bank showed its index of business conditions held at +7, in line with the long-run average. The survey’s often volatile measure of business confidence dropped 5 points to -1.

A measure of sales edged up 1 point to a relatively firm +12, while profits stayed at +4 and employment dipped slightly to +3.

“Business confidence is now in negative territory for the first time in almost a year, likely reflecting some caution in the wake of the February rate hike,” said analysts at NAB.

The Reserve Bank of Australia raised interest rates by a quarter point to 3.85 per cent in February, the first hike in two years, as it struggled to control stubborn inflationary pressures.

The survey showed measures of labour and input costs both rebounded in February, while quarterly growth in retail prices climbed to 1 per cent from just 0.3 per cent.

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There was better news on investment plans, which rose to the highest level in three years, while forward orders trebled to an index reading of +6 in a positive signal for future demand.

The survey was conducted from Feb 23 to March 2 and thus only caught the very beginning of the US-Israeli attack on Iran and subsequent spike in energy prices. REUTERS