Australian business activity showed signs of moderation in September, but remained resilient overall, according to the National Australia Bank’s latest report. The business conditions index, which measures overall business performance, declined slightly to +11 points in September from +13 in August. However, this level is still above average, indicating that the economy has remained in good shape throughout the year.
Despite the moderation in business activity, confidence levels remained steady, although slightly below average. This suggests that businesses are becoming less concerned about the future outlook, even as the Reserve Bank of Australia has signaled the possibility of further interest rate hikes. The central bank has held the country’s cash rate steady for four consecutive months after raising it by 400 basis points over a span of just over a year.
One positive development highlighted in the survey is the moderation of inflationary pressures. Labor costs growth eased to 2.0% quarterly in September from 3.2% in August and 4.0% in July. Similarly, purchase costs growth fell to 1.8% in September from 2.9% the previous month. These trends suggest that some of the key factors driving inflation may be stepping back, which bodes well for the broader inflation outlook.
However, it should be noted that September-quarter inflation in energy, rents, and services prices is expected to remain strong. The Australian Bureau of Statistics will publish quarterly inflation data on October 25, shedding more light on the inflationary trends in the country.
In conclusion, while Australian business activity has moderated slightly, it remains resilient overall. The moderation of inflationary pressures provides some optimism for the future, despite possible future interest rate hikes. The upcoming inflation data will offer further insight into the economic landscape of Australia.