Lending Association

Business conditions show improvement

Business conditions improved slightly in February, yet confidence dipped, according to the latest NAB survey on the Australian economy.

The respected monthly survey confirmed that while inflation remains a challenge and retailing is sluggish, business investment is on the rise.

Key findings include a 3-point increase in business conditions, reaching +10 index points, with trading conditions and profitability up by 4 points each. However, business confidence fell by 1 point to 0 index points.

According to Alan Oster, NAB’s chief economist, robust conditions were observed in service sectors like transport, recreation & personal services, and finance, business & property. Conversely, retail and construction sectors appear weak due to direct exposure to high interest rates.

Despite the overall improvement, forward orders dropped, especially in the retail sector, signaling lingering concerns about the economic outlook.

Elevated cost growth remains a challenge for businesses, leading to potential price increases for consumers. Mr. Oster suggests a cautious approach by the Reserve Bank of Australia (RBA) with regards to interest rates, given the uncertainties ahead.