Australian business conditions rebound in July, cost pressures ease By Reuters

SYDNEY (Reuters) – Business conditions in Australia improved in July thanks to a recovery in employment, a survey showed on Tuesday, while cost pressures continued to ease as high interest rates helped to the slowdown in demand.

The National Australia Bank (OTC:) (NAB) survey showed its business conditions index rose 2 points to +6, just slightly below its long-term average. In contrast, the more volatile business confidence index fell 2 points to +1.

In terms of conditions, the employment index rose from 0 to +7, while sales fell to +9 from +11.

“We were concerned about the sharp decline in the employment index last month, but it has returned to an above-average level this month, suggesting robust job growth in the economy continues for now,” NAB’s chief economist said , Alan Oster.

“The decline in conditions is consistent with the slowdown in growth that has taken place, but we expect the economy to grow faster in the second half of the year.”

The survey found a welcome cooling in price pressures, with procurement costs rising and product prices slowing. Product price inflation held at a quarterly rate of 0.7%, confirming a slowdown in June, while procurement costs rose just 1.1% in the quarter, not far from the pre-COVID pace.

Labor costs, however, rose at a quarterly rate of 2.5 percent from 1.5 percent, likely reflecting increases in the minimum wage earlier in the month, according to Oster.

The Reserve Bank of Australia kept interest rates steady at its August policy meeting, deeming the current rate of 4.35% restrictive enough to bring inflation back to target while preserving employment gains.