According to a recent survey by the National Australia Bank (NAB), Australian business conditions witnessed a decline in January while confidence showed only a minor improvement. Business conditions dropped by 2 points to 6, with all three constituents - trade, profitability, and employment conditions - weakening since the previous month.
NAB's Chief Economist, Alan Oster, explained that business conditions eased in January and slightly fell below the long-term average due to a pullback in the services sectors and persistently weak retail conditions.
Meanwhile, despite a rise of one point to 1, business confidence remained low in December. The slight improvement can be credited to the manufacturing and construction sectors, which managed to counterbalance a decline in retail and wholesale confidence.
Cost growth remained high throughout the year, though it experienced a degree of easing in the second half of 2023. Oster expressed his intention to closely follow the evolution of confidence in early 2024, given the declining price pressures and the growing focus on the easing phase of the rate cycle.
In other indices, Forward orders rose but remained soft, whereas Capital Expenditure (Capex) fell to +3. Capacity utilization managed to rebound to 83.6 percent.
Growth in labor costs remained stable at 2.0 percent, and purchase cost growth saw a small increase to 1.8 percent. Correspondingly, growth in final product prices picked up to 1.2 percent, and retail price growth increased to 0.9 percent.
