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Australian Business Conditions Weaken in January, Rising Costs Remain a Concern


Feb 13, 2024

In January, an NAB survey revealed that Australian business conditions had softened, primarily due to a slowdown in the service sector. The survey also showed an increase in price pressures after a previous cooling in the month before.

NAB’s index of business conditions slipped 2 points to +6 in January, just below its long-run average of +7. The measure of business confidence added 1 point to +1, following a 7-point rebound in December.

According to NAB’s chief economist Alan Oster, “confidence remains weak as it has for some time, consistent with ongoing pressures across the economy with growth clearly slowing in the back half of 2023, and cost growth still high.”

The survey’s measure of business sales eased 3 points to +11, while both profitability and employment dipped 2 points to +5. Capacity utilization picked up to 83.6%, from 82.8%.

Quarterly growth in purchase costs edged up to 1.8% in January, while growth in retail prices rebounded to +0.9% from +0.5% in December. Oster noted that “Price pressures remain solid despite the ongoing easing in activity measures.”

Despite the slowing economy, the Reserve Bank of Australia (RBA) has raised interest rates to a 12-year peak of 4.35% in order to restrain inflation and continues to warn that further hikes might be necessary.

By Editor

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