Australian business sentiment crashes in March on worries about fallout from Iran war

[SYDNEY] Australian business confidence plunged last month by a magnitude only seen during financial crises as the Iran war gave rise to a global oil shock, a survey showed on Tuesday.

The survey from National Australia Bank showed its index of business confidence tumbled 29 points to -29 in March, the second largest monthly fall in history, though business conditions held steady at +6.

A measure of sales edged lower 1 point to a relatively firm +11, but profits fell to +1 from +4, suggesting firms are grappling with squeezed margins as purchase costs jumped by a quarterly rate of 3 per cent in March.

There are signs that businesses are struggling to pass through higher costs to consumers, with the growth in retail prices easing to a quarterly rate of 0.5 per cent from 0.9 per cent.

The Reserve Bank of Australia also raised interest rates by a second time in March to 4.1 per cent, undoing two of three rate cuts from last year. Sharply higher fuel costs from the conflict in the Middle East are likely to lift headline inflation to around 5 per cent in the second quarter, the RBA has estimated.

A separate survey out on Tuesday showed consumer sentiment slumped in April to its lowest in more than two years. An index measuring appetite for large purchases plunged 15% as consumers tightened their wallets. REUTERS