SYDNEY, Sept 10 (Askume) – Australian business conditions fell to their lowest level in two-and-a-half years in August, a survey showed on Tuesday, although inflation pressures appeared to be easing, weighing on employment prospects.
The National Australia Bank (NAB) survey showed its business conditions index fell 3 points to +3, the lowest level since January 2022 and below its long-term average.
The volatile business confidence index fell 5 points to -4, its lowest level so far this year.
Under certain conditions, the employment index fell from +7 to +1 after a slight increase in July, indicating that weak sales and profitability could boost labor demand.
“This suggests that the post-pandemic period of very strong private sector labour demand is coming to an end,” NAB chief economist Alan Oster said.
“Conditions are now well below average compared with the survey’s history, reflecting the broad weakness in the private sector caused by the recession.”
The Reserve Bank of Australia (RBA) has kept interest rates steady at 4.35% since November, arguing that current interest rates are restrictive enough to return inflation to the target range of 2-3% while maintaining job growth.
However, underlying inflation remained steady at 3.9% last quarter, which is why policymakers have ruled out a rate cut this year.
The market still expects an 80% chance of the Reserve Bank of Australia cutting interest rates in December, with one of the biggest scenarios being that the Fed will ease policy this month in line with the other major central banks.
The survey got mixed news on inflation indicators, with quarterly labour cost growth slowing to 1.7% from 2.4% in July, driven by a minimum wage hike.
However, procurement costs rose 1.6% in the quarter, up from 1.3% in July, while retail prices rose 1.2% in the August quarter, up from 1.0% in July.
