Australian business confidence rebounds in Oct. ’24

Australian business confidence surged to a near two-year high in October, buoyed by resilient sales and easing input cost pressures.

The National Australia Bank (NAB) business confidence index climbed 7 points to +5, marking the strongest reading since early 2023.

Sales remained robust, increasing 1 point to +13, while profitability held steady at +5. However, employment intentions dipped slightly, falling 2 points to +3.

Gareth Spence, NAB’s head of Australian economics, attributed the improvement in confidence to a “tentative improvement in forward orders.” This positive trend aligns with a separate survey from Westpac, which showed a second consecutive month of strong gains in consumer confidence, fuelled by hopes of lower interest rates.

The Reserve Bank of Australia (RBA) has kept interest rates unchanged at 4.35 per cent for a year, and market expectations point to a potential rate cut in the coming months.

The NAB survey also provided encouraging signs of easing inflationary pressures. Growth in input costs slowed to 0.9 per cent in the quarter, down from 1.3 per cent in September. Similarly, growth in labour costs eased to 1.4 per cent from 1.9 per cent, and product price growth slowed to 0.5 per cent from 0.6 per cent.

While these figures suggest a gradual moderation in inflation, Spence cautioned that there is still some way to go before inflation returns to the RBA’s target range. The official consumer price inflation rate slowed to 2.8 per cent in the September quarter, but this was largely due to temporary government subsidies on electricity bills.

Attribution: Reuters

Subediting: M. S. Salama