In September, the Australian economy exhibited increased resilience by the end of the quarter, despite signs of weakening price and labor cost pressures, as reported in the latest national business survey by the National Australia Bank (ASX:NAB).
NAB economists noted that the survey, overall, continued to indicate "ongoing resilience in activity," as conditions dipped slightly in September while confidence levels remained unchanged.
NAB Chief Economist Alan Oster provided insight into the survey results, stating, "Business conditions declined in September but remained above average." He pointed out that the conditions index had hovered around its current level of +11 index points since May, suggesting the economy remained in reasonably good shape through the middle of the year.
Business confidence remained steady at +1 index point, with forward orders increasing by 2 points to +2 index points. Capacity utilisation, though slightly down, remained high at 84.2%, indicating that companies were still meeting strong demand for goods and services.
Regarding business confidence, Mr. Oster noted, "The confidence index indicates firms are evenly divided in terms of outlook."
The survey also revealed positive signs for inflation, with both cost pressures and price growth showing signs of easing. Labor cost growth, which had spiked to 4.0% in quarterly terms in July, fell to 2.0% in September. Purchase cost growth also eased, though both remained elevated. Output price growth decreased, mainly due to a reduction in recreational and personal expenses (0.8%), while retail price growth remained high (1.8%).
The NAB cautioned that this improvement would not prevent the third-quarter consumer inflation report, expected at the end of the month, from showing strong inflation for the quarter as a whole, with energy, rents, and various service prices likely to contribute significantly.
Mr Oster commented, "The survey results suggest the easing trend seen earlier in the year may continue, which is a welcome sign for the broader inflation outlook."
