Australian business conditions showed little change in March, with sales and employment remaining steady despite decade-high interest rates, a survey revealed on Tuesday. Price pressures also eased slightly from increased levels.
The National Australia Bank’s (NAB) survey indicated that its business conditions index dipped by 1 point to +9, maintaining its trend of above-average activity over the past year.
Meanwhile, its measure of business confidence rose by 1 point to +1.
Although the survey’s measure of business sales remained stable at +14 and employment held steady at +6, profitability declined by 4 points to +6.
Capacity utilization also slightly decreased to 83.2% from 83.4%, indicating a gradual improvement in the balance between supply and demand.
NAB’s chief economist Alan Oster commented, “Fundamentally, it tells us that firms have continued to be a bit concerned about the outlook even as the economy has remained resilient,” noting some positive developments in the retail and construction sectors for the month.
Quarterly growth in retail prices eased to 1.3%, down from February’s 1.4%, suggesting a potential slowdown in inflation pressures. Growth in purchase costs also declined to 1.4% from 1.8%.
Oster added, “This aligns with our expectation that progress on bringing inflation back to target will be gradual from here, and we expect that to be further reinforced by the Q1 CPI result later in April.”
The Reserve Bank of Australia (RBA) kept interest rates unchanged at 4.35% last month and softened its stance by dropping a tightening bias.
However, it did not provide any definitive policy direction. Market expectations indicate that rates may have peaked, but any relief is not anticipated until around November.
