By James Glynn
SYDNEY–Australian business conditions slipped in March but continue to track at levels above long-run averages, according to the latest monthly survey of business by the National Australia Bank.
The latest NAB survey indicated some encouraging signs that some upstream price pressures, which have driven inflation over the last year, are now cooling appreciably.
Business conditions weakened 2 points to +16 index points in March, while business confidence rose 3 points to -1 index point, according to NAB.
Employment conditions fell 2 points to +10 index points and profitability was down 1 point to +13 index points, while trading conditions remain at a very elevated +26 index points, the survey showed.
The overall strength of business conditions comes despite the Reserve Bank of Australia delivering 10 consecutive increases in interest rates since May last year in a deliberate effort to slow the economy and stymie inflation.
The RBA announced a pause in interest-rate increase in April, saying it remains watchful for any further surge in inflation, boosting consumer sentiment sharply over the month.
“Business conditions have been resilient, slowly edging lower over the past few months but remaining well above their long-run average,” NAB Chief Economist Alan Oster said.
Capacity utilization was 0.1% lower in March but remains well above average at 85.1%, NAB said.
Price and cost growth showed some easing in March. Labor cost growth was 1.9% in quarterly equivalent terms, down from 2.6% in February, the survey showed.
“There are some encouraging signs that some of the upstream cost pressures that have driven inflation to date are now easing considerably, particularly around non-labor inputs,” Mr. Oster said.
This is in line with NAB’s view that inflation likely peaked in late 2022, but will remain elevated in the first quarter.
Write to James Glynn at james.glynn@wsj.com
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