2024.02.1305:36:00UTC+00Australia Business Conditions Weaken In January: NAB

Australia's business conditions weakened in January and confidence remained weak despite a marginal improvement, survey results from NAB showed on Tuesday.

The business conditions index dropped 2 points to 6 in January. All three components namely trading, profitability and employment conditions weakened from the previous month.

The gradual easing in business conditions continued in January and the index moved just below its long-run average, NAB Chief Economist Alan Oster said.

"The easing in conditions in January was led by a pull-back in the services sectors though conditions in retail also remain weak," Oster added.

The business confidence index gained one point to 1 from zero in December.

The survey showed that the improvement was largely driven by manufacturing and construction, partly offset by falls in wholesale and retail confidence.

Cost growth remained high despite some easing over the second half of 2023.

"We will keep a close watch on how confidence evolves through early 2024 as price pressures ease further and the focus on the easing phase of the rates cycle grows," said Oster.

Forward orders rose to -1 but remained soft. The Capex fell three points to +3. The capacity utilization rebounded to 83.6 percent.

Labor cost growth was unchanged at 2.0 while purchase cost growth edged up slightly to 1.8 percent. At the same time, final product price growth picked up to 1.2 percent and retail price growth rose to 0.9 percent.